Market Wrap: Bitcoin Starts the Month in Negative Territory

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.

This article originally appeared in Market Wrap, CoinDesk’s daily newsletter diving into what happened in today's crypto markets. Subscribe to get it in your inbox every day.

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, 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.

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.

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.

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.

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. Read more here.
• 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. Read more here.
• 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. Read more here.
• 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%. Read more here.

Relevant insight

• Listen 🎧 : Today’s "CoinDesk Markets Daily" podcast discusses the latest market movements.
• SEC Slaps Founders, Promoters of Alleged Ponzi Scheme Forsage With Fraud Charges:The regulator says the popular Ethereum dapp was used to swindle over $300 million from investors.
• Craig Wright v. Peter McCormack: Wright Put Forward 'False Evidence,' Will Receive Damages of One British Pound:Wright had sued McCormack for libel after the popular podcaster called him "a liar" and "a fraud" in 2019.
• Crypto Exchange Huobi Now Able to Operate in Australia:Huobi has received a registration with the Australian Transaction Reports and Analysis Centre.
• OneOf NFT Platform Adds American Express as Backer in $8.4M Round:Amex will give exclusive OneOf tokens to cardholders attending a pop-up event in Turkey.
• BofA Says Ethereum Needs Scalability Improvements to Hold Its Market Position:Binance Smart Chain, Tron, Avalanche and Solana have taken market share from Ethereum thanks to their greater scalability and lower transaction fees.
• July Marks Strongest Month of Crypto Fund Inflows This Year:Digital-asset investment products saw inflows of $474 million last month, reversing June’s $481 million of outflows, according to CoinShares.
• UK Crypto Investors Should Limit Holdings, Financial Regulator Says:The crypto crash only hardened the Financial Conduct Authority’s determination to impose restrictions such as banning refer-a-friend bonuses.
• Hardware Wallet Maker Ledger in Talks to Raise Additional $100M, Bloomberg Reports:The fresh funding will give the firm a higher valuation than the $1.5 billion it commanded in June 2021.
• Binance.US to Delist AMP Following SEC Claim That It’s a Security:The move will be effective as of Aug. 15.

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

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.