According to TechFlow, Grayscale, a cryptocurrency investment service company, reported in its latest report that cryptocurrency valuations fell in early August due to concerns about the U.S. economic outlook and financial market volatility. Ethereum's poor performance may be due to excessive positions in the futures market and large-scale selling.
The report believes that if the U.S. economy achieves a "soft landing," token valuations are expected to rebound, and Bitcoin is expected to challenge its all-time highs again later this year. Even in a weaker economic environment, Grayscale Research believes that downside price risks may be more limited than in the past.
The report analyzes the factors that led to the decline, including the US employment report that was weaker than expected, excessive long-term positions in the Ethereum futures market, and possible selling by large investors such as Jump Crypto.
Grayscale said that factors such as stable demand for U.S.-listed ETPs, reduced credit supply from centralized financial institutions, and relatively stable returns on altcoins so far this year may limit downside price risks.
The report also pointed out that changes in the US political landscape may reduce the risk of downside valuations. Grayscale believes that economic cycles are an inevitable feature of almost all asset class investments, and uncertainty in the macro outlook should be viewed as a short-term risk for crypto investors. An economic recession may prompt the government to adopt loose policies, which in turn strengthens the long-term investment value of Bitcoin.
