Market Wrap: Cryptos and Stocks Dip Ahead of Seasonally Strong May

BTC is lagging equities and gold so far this year, although returns are typically positive in May.

AccessTimeIconApr 29, 2022 at 8:36 p.m. UTC
Updated Nov 14, 2022 at 6:01 p.m. UTC

Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

Bitcoin (BTC) declined from a high of $40,200 during the New York trading day, tracking losses in stocks.

Most alternative cryptocurrencies (altcoins) underperformed bitcoin on Friday, indicating a lower appetite for risk among traders. For example, ether (ETH) was down by 5% over the past 24 hours, compared with a 4% dip in BTC and a 6% drop in Avalanche's AVAX token over the same period.

Just launched! Please sign up for our daily Market Wrap newsletter explaining what happens in crypto markets – and why.

The S&P 500 also traded lower on Friday, and is on track for its worst start to a year since 1942. At the same time, gold prices ticked higher over the past 24 hours, maintaining a 6% advance over the past six months.

Latest prices

Bitcoin (BTC): $38388, −3.98%

Ether (ETH): $2795, −5.24%

S&P 500 daily close: $4132, −3.63%

Gold: $1897 per troy ounce, +0.44%

Ten-year Treasury yield daily close: 2.89%


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 lagging so far this year

Bitcoin is underperforming the S&P 500 and gold year to date, but is slightly ahead of long-term Treasury bonds as shown in the chart below. There has been a persistent risk-off theme so far this year, driven by macroeconomic and geopolitical risk.

Typically, investors reduce their exposure to speculative assets such as stocks and cryptos during times of uncertainty – and bond returns fall when rates rise. In contrast, gold and other commodities typically outperform when inflation rises.

BTC has traded in a choppy range over the past year, with midpoint at $40,000. Despite negative year-to-date returns, the cryptocurrency is still up 16% from its Jan. 24 low around $33,000, compared with the S&P 500, which is trading lower so far this year.

CoinDesk - Unknown

Bitcoin and macro asset returns YTD (CoinDesk)

Crypto's sea of red

The chart below shows CoinDesk 20 asset returns so far this month, which is negative across the board.

The CoinDesk 20 filters thousands of cryptocurrencies and digital assets to define a core group of 20 by market cap, trading volume and other factors. These assets constitute roughly 99% of the market by volume at eight of the largest and most reliable exchanges, according to CoinDesk.

Dogecoin's DOGE token outperformed the CoinDesk 20 in April after experiencing a 20% price rally earlier this week. The move was partly driven by Twitter's (TWTR) acceptance of a takeover bid from Tesla (TSLA) CEO Elon Musk. The dog themed meme-coin erased most of its gains over the past few days, although it was still well ahead of Shiba Inu's SHIB token's 18% loss over the past 30 days.

ETC, the native cryptocurrency of Ethereum Classic, a blockchain project that was created in 2016 when Ethereum’s blockchain split into two separate chains, was the worst performing crypto in the CoinDesk 20 in April, falling from its top spot in March.

Meanwhile, BTC and ETH experienced less selling pressure than other alternative cryptos in April. Typically, altcoins underperform in down markets because of their greater risk profile relative to bitcoin. That suggests a lower appetite for risk among crypto traders.

CoinDesk - Unknown

Crypto returns in April (CoinDesk)

Seasonally strong May

Will April showers bring May flowers?

The chart below bitcoin's average historical return by month in the top panel. And the second panel shows the percentage of times when the cryptocurrency generated a positive return in each month over the past nine years.

Historically, bitcoin has generated an average return of 17% in May. Stocks are also trading in a seasonally strong period, which could provide an opportunity for buyers to enter the market after three months of sideways trading.

Still, historical returns are no guarantee of future returns. For example, technical indicators point to a period of stabilization, albeit with limited upside in price. And sentiment among crypto derivative traders remains mixed.

CoinDesk - Unknown

Bitcoin historical returns (CoinDesk, StockCharts)

Altcoin roundup

  • ApeCoin futures see $36 million in liquidations: APE prices jumped to more than $27.50 on Thursday evening from $19 on Wednesday before profit-taking saw the tokens decline to as low as $20.48 in Asian morning hours on Friday. Thursday’s volatility came ahead of virtual pockets of land going on sale in the popular Bored Ape Yacht Club (BAYC) ecosystem, confirming rumors from last week. Read full article here.
  • Nexo token's short-lived rally: NEXO, the token of the Nexo crypto lending protocol that offers credit cards and loans to retail users, surged over the last 24 hours after one of the world’s largest exchanges, Binance, listed the token. The token peaked at $3.64, just 13% off its all-time high in February. Read full article here.
  • Sideways trading volume: Similar to most spot exchanges, trading volume on Coinbase has been relatively stable over the past week. "ETH remains in the second spot of the most traded coins while APE and JASMY have overtaken SOL this week," the exchange wrote in a Friday newsletter.

Relevant insight

Other markets

Most digital assets in the CoinDesk 20 ended the day lower.

Biggest Gainers

There are no gainers in CoinDesk 20 today.

Biggest Losers

Asset Ticker Returns DACS Sector
Internet Computer ICP −8.6% Computing
Polygon MATIC −8.5% Smart Contract Platform
Algorand ALGO −8.3% 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.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

CoinDesk - Unknown

Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.