Cryptocurrency Market Saw Decreased Volatility and Trading Volume in July amid Lack of Catalysts
Summary?of?July?2023
In?July,?the?trading?volume?of?cryptocurrencies?experienced?a?general?decline,?with?the?exception?of?a?significant?increase?in?trading?activity?in?certain?cryptocurrencies?following?the?verdict?in?the?Ripple?vs?SEC?Lawsuit?in?mid-July.?
There?was?a?shift?in?commercial?trader?positioning?on?the?Chicago?Mercantile?Exchange?(CME),?where?they?capitalized?on?the?June?rally.?Additionally,?there?was?a?decrease?in?the?annualized?volatility?of?Bitcoin?as?trading?activities?dwindled.?The?price?of?Bitcoin?remained?range-bound,?consistent?with?its?historical?seasonal?patterns.
These?market?dynamics?suggest?that?investors?and?traders?are?cautiously?awaiting?catalysts?to?trigger?extended?price?discovery?in?the?cryptocurrency?market.?The?Federal?Reserve's?monetary?policy?stance?and?the?potential?for?a?"higher?for?longer"?interest?rate?environment?may?contribute?to?a?heightened?level?of?uncertainty?and?market?volatility,?which?could?impact?the?performance?of?digital?assets?in?the?near?term.
It?is?important?to?note?that?the?cryptocurrency?market?is?highly?speculative?and?prices?can?be?influenced?by?a?wide?range?of?factors,?including?regulatory?developments,?adoption?rates,?and?technological?advancements.?As?such,?investors?and?traders?should?exercise?caution?and?perform?thorough?risk?assessments?before?making?any?investment?decisions.
Macro?Economic?Outlook
Quantitative?Tightening
The?Federal?Reserve's?Quantitative?Tightening?program?is?ongoing,?and?the?Committee?will?continue?reducing?its?holdings?of?Treasury?securities?and?agency?debt?and?agency?mortgage-backed?securities,?removing?liquidity?from?the?markets?and?economy.?Reference:?
Inflation?and?Interest?Rates
Inflation?data?dropped?signs?of?moderation,?with?U.S.?CPI?(year-over-year)?falling?to?3%?and?CORE?CPI?(month-over-month)?falling?to?0.2%?in?June.
In?July?FOMC?meeting,?the?Fed?raised?25bps.?Despite?inflation?data?dropping?to?the?yearly?low,?during?the?FOMC?press?conference,?Chairman?Jerome Powell stated that the process of getting inflation back down to 2 percent has a long way to go.?After?the?announcement,?CME FedWatch Tool? reflected?that?an?additional?rate?hike?is?expected?in?the?Sep?FOMC.
Inflation?in?European?countries?remained?elevated,?with?the?CPI?(year-over-year)?dropping?to?5.5%?in?June.?In?July,?the?European?Central?Bank?raised?rates?by?25?basis?points.
Market?Commentary
2.1?Commercial?Traders?Capitalized?on?June?Rally,?Shifted?to?Slightly?Net?Short?Position?in?Bitcoin?CME?Futures
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
In?July,?commercial?traders?on?the?CME?Exchange?adjusted?their?positions,?reducing?their?net?long?exposure?and?capitalizing?on?the?June?rally?that?was?fuelled?by?news?of?bullish?institutional?adoption.?During?the?latter?half?of?the?month,?the?Dollar?Index?experienced?a?notable?increase,?indicating?a?weakening?risk?appetite.?Consequently,?Bitcoin?price?trended?downwards?towards?the?end?of?the?month.
2.2?Bitcoin?Price?Stayed?Above?Realized?Price?and?Cost?Basis?for?Short-?and?Long-Term?Holder?
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
In?July,?Bitcoin's?price?consolidated?above?the?200-week?moving?average?and?short-term?holder?cost?basis. The?realized?price?converged?with?the?long-term?holder?cost?basis?at?$20,300.?Since?March,?we?have?observed?increased?buying?power?near?the?short-term?holder?cost?basis.?Given?that?the?Dollar?Index?regained?strength?and?commercial?traders?on?the?CME?Exchange?have?shifted?to?a?slightly?net?short?position,?we?anticipate?that?the?Bitcoin?price?will?erode?steadily?towards?the?short-term?holder?cost?basis.?This?raises?the?question?of?whether?trend-following?investors?will?step?in?and?add?to?their?positions.
2.3?Aggregate?Circulating?Supply?of?Top?4?Stablecoins?Continued?to?Decline,?Total?Staked?ETH?Rose,?Stablecoin?Supply?Ratio?Oscillator?Suggested?Moderate?Conditions?for?Bitcoin?Price
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
The?stablecoin?supply?ratio?oscillator?pointed?towards?moderate?conditions?for?the?Bitcoin?price?in?July,?providing?further?evidence?of?a?cautious?investor?sentiment. The?aggregate?circulating?supply?of?the?top?4?stablecoins?experienced?a?persistent?decline?since?mid?2022,?culminating?in?a?total?value?of?$117?billion?by?the?end?of?July.?This?downward?trend?suggests?a?weakening?of?capital?inflow?and?purchasing?power?for?the?majority?of?cryptocurrencies.?
Concurrently,??the?total?value?locked?for?DeFi?(ETH?chain)?remained?relatively?stagnant,?lagging?behind?the?market?expansion?of?Bitcoin?and?Ethereum.?Moreover,?the?total?staked?ETH?continued?to?rise,?reaching?an?all-time?high?of?27.62?million?ETH?at?the?end?of?July.?This?divergence?in?performance?may?indicate?that?investors?have?become?increasingly?risk-averse?for?altcoins?and?are?shifting?their?investments?towards?more?established?cryptocurrencies,?such?as?Bitcoin?and?Ethereum.
2.4?The?month?of?July?saw?a?downturn?in?the?trading?volume?of?cryptocurrency?exchanges,?which?could?be?interpreted?as?a?symptom?of?a?broader?decrease?in?market?dynamism?and?investor?engagement
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
In?the?month?of?July,?the?trading?volume?of?prominent?cryptocurrency?exchanges?experienced?a?decline?compared?to?the?previous?month.?This?downward?trend?can?be?attributed?to?the?absence?of?high-impact?news?events?in?July,?following?a?period?of?increased?market?activity?in?June.
However,?it?is?worth?noting?that?during?the?13th?and?14th?of?July,?major?cryptocurrency?exchanges,?including?decentralized?exchanges,?observed?a?significant?surge?in?trading?volume.?This?upswing?was?largely?driven?by?the?highly?anticipated?verdict?in?the?legal?dispute?between?Ripple?and?the?Securities?and?Exchange?Commission?(SEC),?which?injected?a?sense?of?optimism?into?the?markets.
The?second?half?of?July,?devoid?of?significant?news?drivers,?saw?a?return?to?below-average?trading?volume?levels.
2.5?The?relative?volume?of?major?cryptocurrencies?in?July?decreased,?falling?below?a?90-day?average?benchmark
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
Following?the?initial?excitement?surrounding?institutional?adoption?news,?the?relative?volume?of?Bitcoin,?Ethereum,?Litecoin,?and?Bitcoin?Cash?decreased,?falling?below?a?90- day?average?benchmark.?This?suggests?that?the?market?may?have?entered?a?period?of?consolidation,?with?investors?taking?profits?and?awaiting?further?developments?before?making?new?investment?decisions.
2.6?The?30- day?Rolling?Volatility?of?Major?Cryptocurrencies,?Measured?on?an?Annualized?Basis,?Decreased?in?July
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
The?30-day?rolling?volatility?of?major?cryptocurrencies,?measured?on?an?annualized?basis,?decreased?in?July.?Specifically,?the?volatility?of?Bitcoin,?Ethereum,?Litecoin,?and?Bitcoin?Cash?all?declined.?This?decrease?in?volatility?suggests?that?the?market?may?have?entered?a?period?of?consolidation,?with?investors?taking?profits?and?awaiting?further?catalysts?before?making?new?investment?decisions.?Additionally,?Bitcoin's?value?dropped?below?its?Q2?level,?further?indicative?of?a?potential?market?slowdown.
2.7?Trading?Traffic?Analysis?by?15-Minute?Interval
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
July?saw?a?decrease?in?trading?activity?compared?to?June,?with?a?15-minute?interval?aggregate?trading?volume?of?94523?BTC,?down?from?146845?BTC?in?June.?The?aggregate?number?of?trades?per?15-minute?interval?also?declined,?from?1341937?in?June?to?819965?in?July.?Additionally,?the?average?displacement?per?15-minute?interval?decreased?from?$84?to?$60,?indicating?lower?volatility.
The?most?active?trading?hours?were?observed?in?two?periods:?between?13:30?-?15:30?(UTC)?during?the?London?Close?and?New?York?opening,?and?18:15?-?19:15?(UTC)?during?the?middle?of?the?NY?trading?session.
2.8?Bitcoin?Volume?Profile?Indicates?Significant?Trading?Activity?at?$28,000,?Supporting?a?Fair?Value?Assessment
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
The?volume?profile?of?Bitcoin?provides?valuable?insights?into?the?distribution?and?range?of?trading?volume,?offering?a?unique?perspective?on?the?its?price?movements.?The?Volume?Point?of?Control?(VPOC),?represented?by?the?dotted?red?line,?indicates?the?price?level?at?which?the?highest?volume?of?trades?occurred?during?a?specific?period.?A?closer?examination?of?the?volume?profile?reveals?two?notable?areas?of?interest?for?Bitcoin's?price?movements:?the?$28,000?level?from?mid-March?to?mid-June,?and?the?current?area?centered?around?$30,250.?The?VPOC?in?Q2?2023?at?$28,000?is?particularly?significant,?as?it?represents?the?price?point?with?the?highest?trading?volume?between?March?and?July?which?serves?as?a?benchmark?for?assessing?Bitcoin's?fair?value.?This?suggests?that?a?significant?number?of?market?participants?are?comfortable?transacting?at?this?price?level,?potentially?indicating?a?fair?value?zone?for?Bitcoin.
2.9?Trading?Volume?on?BTCTUSD?Outpaces?BTCUSDT,?BTCTUSD?Maintains?Premium?Over?BTCUSDT
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
The?price?of?Bitcoin?(BTC)?on?the?BTCTUSD?pair?continued?to?trade?at?a?premium?over?the?BTCUSDT?pair?during?July.?Furthermore,?the?trading?volume?of?BTCTUSD?increased?significantly,?from?approximately?double?that?of?BTCUSDT?to?triple,?towards?the?end?of?July.?Notably,?the?trading?volume?of?BTCTUSD?exceeded?that?of?BTCUSDT?by?a?factor?of?5?at?its?peak. Since Binance launched a zero fee promotion for BTCTUSD pair in March?,?traders?have?migrated?from?trading?BTCUSDT?pair?to?BTCTUSD?pair,?enhancing?the?liquidity?conditions?of?the?latter.
2.10?Trading?Volume?on?ETHTUSD?was?significantly?smaller?than?ETHUSDT,?despite?trading?at?a?premium?against?ETHUSDT
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
The?price?of?Ethereum?(ETH)?on?the?ETHTUSD?pair?continued?to?trade?at?a?premium?over?the?ETHUSDT?pair.?However,?the?trading?volume?of?ETHTUSD?represented?a?significantly?lower?percentage?of?the?total?trading?volume?of?ETHUSDT,?at?less?than?5%,?as?there's?no?zero?fee?promotion?for?ETHTUSD?pair.?This?contrasts?notably?with?the?trading?volume?of?BTCTUSD?against?BTCUSDT,?which?exhibited?a?much?higher?level?of?activity.
2.11?Bitcoin?Continues?Maintaining?Tight?Correlation?with?Ethereum
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
This?correlation,?quantified?by?a?Pearson?correlation?coefficient?of?0.9,?underscores?the?consistent?parallel?movements?of?these?prominent?cryptocurrencies?on?a?daily?basis.?Nevertheless,?it?is?noteworthy?that?a?temporary?deviation?in?the?correlation?emerged?in?early?July,?primarily?attributable?to?Ethereum's?failure?to?replicate?Bitcoin's?returns.?This?divergence?can?be?attributed?to?the?prevailing?bullish?market?catalysts,?which?predominantly?favored?Bitcoin?over?Ethereum.
领英推荐
2.12?Prior?to?Halving,?Litecoin?Experienced?Increased?Volatility?but?Reverted?to?Align?with?Bitcoin's?Price?Action
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
Throughout?the?months?of?June?and?July,?Litecoin?demonstrated?a?marked?escalation?in?volatility?as?it?approached?its?halving?event?in?early?August.?Notably,?despite?experiencing?heightened?fluctuations,?Litecoin?eventually?realigned?its?price?dynamics?with?that?of?Bitcoin,?primarily?influenced?by?the?gravitational?pull?of?Bitcoin?in?the?cryptocurrency?market.?During?our?analysis,?we?observed?a?noteworthy?pattern?wherein,?when?the?1-day?correlation?between?Litecoin?and?Bitcoin?dropped?below?0.4,?Litecoin?tended?to?revert?back?to?its?mean?value.?The?mean?correlation,?centered?around?0.7,?indicated?a?tendency?for?Litecoin's?price?action?to?align?with?that?of?Bitcoin.?This?observation?further?highlights?the?influence?of?Bitcoin's?market?dynamics?on?Litecoin?and?its?role?in?driving?the?convergence?of?their?price?movements.
2.13??Ripple?vs?SEC's?Complex?Verdict:?Market?Sentiment?Boosted?as?Majority?of?Cryptocurrencies?Gain?Momentum
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
On?July?13,?2023,?the?United?States?Southern?District?Court?of?New?York?rendered?a?ruling?in?the?case?involving?Ripple's?sales?of?XRP,?in?which?the?court?determined?that?Ripple's?Institutional?Sales?of?XRP?qualified?as?the?unregistered?offer?and?sale?of?investment?contracts,?thereby?violating?the?Securities?Act.?However,?the?court?also?found?that?Ripple's?Programmatic?Sales?of?XRP?(selling?via?exchanges)?did?not?constitute?a?violation.?This?mixed?verdict?for?Ripple?sparked?a?significant?increase?in?XRP's?price,?with?a?102%?surge?in?a?single?day.?Additionally,?Coinbase,?a?popular?cryptocurrency?exchange,?relisted?XRP?on?their?platform.?It?is?important?to?note,?however,?that?the?legal?battle?between?Ripple?and?the?SEC?is?ongoing,?and?the?SEC?may?choose?to?appeal?the?decision.
It's?interesting?to?note?that?$XLM,?$SOL?and?$LINK?saw?increased?volatility?while?the?majority?of?L1s?remained?stagnant.
2.14?Trending?Layer?2s?Performance?(July)
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
L2s?also?experienced?increased?volatility?following?the?release?of?the?Ripple?vs?SEC?verdict.
2.15?Trending?GameFi/Metaverse?Tokens?Performance?(July)
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
The?GameFi/?Metaverse?sector?remained?stagnant.
2.16?Trending?DeFi?Tokens?Performance?(July)
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
Among?the?cryptocurrencies?associated?with?Decentralized?Finance?(DeFi),?$MKR?demonstrated?notable?performance,?outpacing?its?peers.
2.17?Trending?CEX?Tokens?and?Memecoins?Performance?(July)
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
The?value?of?CEX?tokens?remained?largely?unchanged,?while?$DOGE?and?$SHIBA?experienced?a?surge?in?value?due?to?unconfirmed?reports?of?X?(previously?known?as?Twitter)?incorporating?cryptocurrencies?into?its?payment?system.
2.18??August?Historically?Sees?Increased?Volatility?in?Bitcoin
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
The?month?of?July?tends?to?exhibit?consolidation?trends?in?the?S&P?500,?Nasdaq,?Gold,?and?Bitcoin?markets.?As?we?enter?August,?the?seasonal?patterns?of?the?S&P?500,?Nasdaq,?and?Gold?tend?to?be?positive.?However,?Bitcoin?has?historically?experienced?heightened?volatility?during?August,?leading?to?a?downward?trajectory.
News?Highlights
August?Volatility
Appendix
Source:?LTP?Research,?2023.?Data?retrieved?from?Fred,?as?of?August?1,?2023. For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
For?informational?purposes?only?and?should?not?be?considered?investment?advice?or?a?recommendation?to?buy,?sell,?or?hold?any?particular?security?or?cryptocurrency.
Disclaimers
The?information,?opinions,?estimates,?and?projections?contained?in?this?cryptocurrency?market?commentary?(collectively?"Information")?are?provided?by?LIQUIDITY?TECHNOLOGIES?INC.?(the?"Company").?This?Information?is?for?informational?purposes?only?and?is?not?intended?to?serve?as?investment?advice?or?any?form?of?endorsement?or?recommendation.?The?company?has?taken?reasonable?measures?to?ensure?the?accuracy?and?validity?of?the?Information?provided?but?makes?no?warranty?as?to?its?accuracy?or?completeness.?The?opinions?expressed?reflect?the?judgment?of?the?authors?at?the?date?of?publication?and?are?subject?to?change?without?notice.The?Information?should?not?be?construed?as?an?offer?or?solicitation?to?buy?or?sell?or?trade?in?any?cryptocurrency,?security,?or?financial?instrument.?It?does?not?account?for?individual?investment?objectives?or?the?financial?situation?of?any?readers.?Cryptocurrencies?are?volatile?and?complex?products?and?are?subject?to?significant?risks?including?the?risk?of?sudden?and?substantial?price?movements.Investments?in?cryptocurrencies?are?not?protected?by?any?statutory?compensation?arrangements?in?the?event?of?the?firm's?failure.?The?value?of?cryptocurrencies?may?be?affected?by?changes?in?currency?exchange?rates,?regulatory?interventions,?or?other?political?and?economic?developments.Investors?should?be?aware?that?the?value?of?their?investments?can?fall?as?well?as?rise,?and?they?may?not?receive?back?the?original?amount?they?invested.?If?you?are?in?any?doubt?about?the?contents?of?this?document,?you?should?seek?independent?professional?advice.
Any?historical?information?contained?in?this?Information?is?based?on?our?own?analysis?and?is?provided?for?illustrative?purposes?only.?Past?performance?is?not?indicative?of?future?results,?which?may?vary.In?no?event?shall?the?company,?nor?its?directors,?employees,?agents,?partners,?suppliers?or?affiliates,?be?accountable?or?liable?for?any?indirect,?incidental,?special,?consequential?or?punitive?damages,?including?without?limitation,?loss?of?profits,?data,?use,?goodwill,?or?other?intangible?losses,?resulting?from?the?use?of?this?Information.?The?company??reserves?the?right?to?change,?modify,?add,?or?remove?portions?of?this?Information?for?any?reason?at?any?time?without?notice.