Market Wrap: Bitcoin Finishes the Week in Positive Territory Again

Hi, I'm Glenn Williams Jr., here to take you through the day's crypto market highlights and news.

Bitcoin (BTC) advanced slightly on Friday to trade just over $23,000, recently up 0.6% over the past 24 hours.

Friday’s performance resulted in a 14% increase for the largest cryptocurrency by market capitalization over the previous seven trading days.

Bitcoin’s price has begun to decouple from traditional markets over the last 30 trading days. While its 90-day correlation with the S&P 500 sits at 0.96 (implying lockstep movement between the two), its 30-day correlation with the S&P 500 has declined to 0.78.

While 0.78 still implies a strong relationship between the two assets, the decline indicates that the two assets have begun to trade more independently of each other.

In traditional equity markets, the S&P 500 and Nasdaq were down 0.7% and 2.1%, respectively. West Texas Intermediate crude oil (WTI) is down 0.5%, while gold’s price has increased by 0.6%.

Ether (ETH) prices increased 1.59% on Friday.

Polkadot (DOT) and chainlink (LINK) led the gainers among alternative coins (altcoins) in the CoinDesk 20 index, rising 1.6% and 0.5%, respectively. Solana (SOL) and cosmos (ATOM) were the biggest losers, falling 4.29% and 4.22%, respectively.

Today’s edition of "Market Wrap" was produced by Sage D. Young.

Latest prices

●Bitcoin (BTC): $22,666 −2.0%

●Ether (ETH): $1,531 −2.4%

●S&P 500 daily close: 3,954.39 −1.1%

●Gold: $1,722 per troy ounce +0.6%

●Ten-year Treasury yield daily close: 2.78% −0.1

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

A Look at This Week’s Performance Shows Higher Prices and Lower Correlations

By Glenn Williams Jr.

As we close the week, let’s look at how markets performed overall.

BTC and ETH outperformed traditional asset classes on the week, but still trail when looking at year-to-date performance. There’s also a noticeable shift in correlations when we narrow the time frame from 90 to 30 days.

For context, we use the correlation coefficient to examine the strength of the relationship between the price movements of different assets. A correlation close to 1 indicates a strong relationship between assets, while a correlation of zero indicates no relationship. Moreover, a correlation of -1 indicates a complete inverse relationship between the assets in question.

What we’ve noticed over the last 30 days of trading is that while BTC and ETH remain strongly correlated to each other (and will likely continue to be), the correlation between cryptocurrencies and traditional assets is beginning to return to levels witnessed earlier this year.

Funding rates continue to indicate BTC buying strength

An indicator that we broached earlier this week which bears reexamination is the current level of BTC funding rates. As a reminder, funding rates represent payments to traders that are long or short BTC. They can reflect trader sentiment within futures markets. When funding rates are positive, investors often view this as bullish in nature. Conversely, when funding rates are negative, investors view this as bearish. As it stands, BTC funding rates have been positive every day in July, except July 1, July 10 and July 15.

What are we keeping an eye out for next week?

Macroeconomic conditions were quiet Friday, but we will be eyeing a couple of key data points next week. Most notably will be the Federal Open Market Committee’s (FOMC) interest rate decision on Wednesday of next week. We fully expect rates to increase by 75 basis points, as reflected in current consensus estimates.

Note that we offer no exotic formula or tools of prognostication in voicing our expectations for FOMC decisions. We essentially monitor what they say, using tools like the FOMC “dot plot” (pictured below) as a guide.

For context, the FOMC dot plot is simply a record of each Federal Reserve official's projection for the Fed Funds rate. We expect that rates will increase to 2.5% next week and approach 3.5% by the end of 2022. To the extent that this remains unchanged, we anticipate that the price of BTC already reflects this data.

Altcoin roundup

• Synthetix’s SNX Rises 14% on Liquidity Deal Renewal: Developers said the Synthetix protocol’s decentralized autonomous organization (DAO) has renewed a deal with liquidity provider Jump Crypto. Synthetix has traded over $2.8 billion worth of on-chain assets following its launch of atomic swaps earlier this year. Read more here.

• Ether Breaks $1.6K on Merge Hype: Major cryptocurrencies gained amid a run-up in broader equity markets in Asia and Europe. QCP Capital expects the Fed will raise rates by 75 basis points next week. Read more here.

• Binance Says It Doesn't Stake or Lend 'Locked' Dogecoin: The crypto exchange clarified that coins deposited in its recently launched staking program for proof-of-work (PoW) token dogecoin (DOGE) and litecoin (LTC) would remain with the exchange and won't be lent out for generating additional yield. Read more here.

Relevant insight

• Listen 🎧: Today’s "CoinDesk Markets Daily" podcast discusses the latest market movements.

• Crypto Lender BlockFi Had $1.8B in Open Loans at End of June and $600M of Exposure: The company has released a quarter-end snapshot of a number of operating statistics.

• Three Arrows Capital Founders Say Terra, GBTC Trades Led to Fund Blowup, Bloomberg Reports: “What we failed to realize was that luna was capable of falling to effectively zero,” Three Arrows Capital co-founder Su Zhu said.

• CoinFLEX Proposes Plan to Compensate Depositors, Restructure Business: The exchange wants to issue new recovery tokens and also give depositors equity in the firm and locked FLEX Coins.

• Nexo, Crypto Lender on Prowl for Ailing Rivals, Faces Declining Deposits: An analysis of crypto lender Nexo's attestations, including older data retrieved using the Wayback Machine, reveals just how much its deposits have declined in recent months.

• Citi Says Crypto Contagion Appears to Have Ceased: Stablecoin outflows have been stemmed and outflows from ETFs have also stabilized, the report said.

• Bitcoin Mining Difficulty Drops as Miners Feel the Texas Heat: It's the third consecutive downward adjustment – the first time that's happened since last July.

• Bank of Central African States Urged to Introduce Common Digital Currency, Bloomberg Reports: The regional bank is a staunch critic of the Central African Republic's decision to make bitcoin legal tender in April.

• Taiwan Set to Ban Crypto Purchases Using Credit Cards, According to Local Media Reports: The country's financial regulator sent a letter to the banking association asking credit card companies to stop taking on crypto firms as merchants.

• US Calls Off Extradition Request for BTC-e Operator Alexander Vinnik: U.S. authorities still want to try Vinnik, but his lawyer said they carried out a legal maneuver to keep him in prison longer and eventually get him to the U.S.

Other markets

Biggest Gainers

There are no gainers in CoinDesk 20 today.

Biggest Losers

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.