Market Wrap: Bitcoin Starts the Month in Negative Territory

Market Wrap: Bitcoin Starts the Month in Negative Territory

By Glenn Williams, Jimmy He

BTC gives back a bit of last week’s gain on reduced volume.

Bitcoin’s (BTC) started the week with a drop of 3% on lower-than-average volume. The cryptocurrency is down 51% year to date.

The coin’s dominance, a metric that measures the market cap of BTC relative to the rest of the cryptocurrency market, sits at 42%, compared with 40% on Jan. 1 and 41.8% on April 1.

In traditional markets, the S&P 500 declined 0.5%, while the Dow Jones Industrial Average fell 0.3%. The tech-heavy Nasdaq Composite Index was 0.4% lower on the day.

Business software company and large BTC holder MicroStrategy is set to report its fiscal second-quarter results on Tuesday. Analysts on average project a loss of $7.27 a share, following a loss of $11.58 a share in the company’s fiscal first quarter ended June 30.

The 30-day correlation between BTC and MicroStrategy’s stock is 0.85, implying that the price of the shares is tied heavily to BTC. The correlation coefficient ranges between -1.0 and 1.0, with higher ratings indicating a stronger relationship between assets.

Ether’s (ETH) price declined 4.5% on Monday, following a 9% increase last week.

Altcoins fell on Monday, as well, with Polkadot (DOT) down 8.5% and Cosmos (ATOM) down 7%.

Latest prices

●Bitcoin (BTC): $22,980 −3.7%

●Ether (ETH): $1,625 −5.6%

●S&P 500 daily close: 4,118.62 −0.3%

●Gold: $1,788 per troy ounce +1.4%

●Ten-year Treasury yield daily close: 2.61% −0.04


Bitcoin takes a step back

Following last week’s price movement, it makes sense to take a look at open interest in the bitcoin options market, relative to the strike price. Open interest by strike indicates the volume of option orders to buy (calls) or sell (puts) or both at various strike prices, and can provide insight into traders’ views on the fair value of BTC.

The most notable change in this metric from this column’s previous look last week is an increase in puts purchased at $23,000. Because puts represent the option but not the obligation to sell (in this case at $23,000), they can be interpreted as traders buying downside protection should prices surpass $23,000.

Call option (i.e. the right but not the obligation to buy) open interest remains heaviest at $25,000, which can be inferred as where bullish investors are willing to purchase BTC.

CoinDesk - Unknown
BTC options open interest by strike price displays option orders to buy or sell BTC at various price levels. (Coinglass)

The chart above can be viewed in context with on-chain data indicating bitcoin’s current “realized price.” Realized price is bitcoin’s realized market capitalization divided by the current bitcoin supply; the realized market capitalization is based on the price of coins where they last traded.

BTC’s current realized price is $21,000. The crypto has moved above the realized price, after falling below that level in June. Surpassing the realized price implies that more BTC investors have moved into a profitable range. The more investors are in the green, the more the price level tends to serve as additional support.

CoinDesk - Unknown
The realized price shows what the average cost for bitcoin was for all market participants. (CryptoQuant)

Bitcoin prices remain underpinned by a supply of coins that lie dormant

The number of BTC coins that haven’t changed hands in over 10 years continues to increase. Some of those coins might have been lost outright, but some investors appear to have no intentions of selling.

CoinDesk - Unknown
The total supply last active 10 years ago shows the number of bitcoin that haven’t changed hands in more than a decade. (Glassnode)

For context, the 2.5 million coins that lie dormant in cold storage exceeds the 2.4 million BTC now held across all exchanges.

On the macroeconomic front, things will be relatively quiet to start the week, although on Monday the Institute of Supply Management released a survey showing that manufacturing in the U.S. slowed down in June. Construction spending declined by 1.1% in June from May, missing estimates. The purchasing managers index, however, exceeded estimates with a reading of 52.8. A reading above 50 indicates that manufacturing is expanding, and a reading below 50 indicates that manufacturing is contracting.

Altcoin roundup

  • Socios Owner Invests $100M in FC Barcelona’s Web3 Efforts: Chiliz has acquired a 24.5% stake in Barca Studios, the Spanish soccer giant’s digital-content creation arm. Chiliz’s CHZ token is up 10% over the past 24 hours.
  • Aave Passes Proposal for GHO: An Aave community proposal to launch the native yield-generating stablecoin was passed over the weekend with 99% votes in favor of the proposal. GHO will be initially available on the Ethereum network.
  • Ether Flips Bitcoin in Options Market for the First Time: Ether has overtaken industry leader bitcoin in the options market for the first time on record. The put-call ratio has dipped to a yearly low, indicating bullish momentum, Deribit’s Luuk Strijers said.
  • Tiffany Unveils $50K CryptoPunk Necklaces: The collection of diamond-encrusted pendants, which are in the form of non-fungible tokens (NFTs), is exclusively available for CryptoPunk owners to purchase. Since the announcement, CryptoPunks’ floor price has surged 10%.


Other markets

Biggest Gainers

Asset Ticker Returns DACS Sector
Terra LUNA +8.5% Smart Contract Platform
Gala GALA +5.8% Entertainment

Biggest Losers

Asset Ticker Returns DACS Sector
Polkadot DOT −9.2% Smart Contract Platform
Avalanche AVAX −6.2% Smart Contract Platform
Solana SOL −6.2% Smart Contract Platform

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