Market Wrap: Bitcoin Declines Further as Momentum Wanes

BTC is approaching support at about $20.5K; the options market implies concerns of additional price declines.

AccessTimeIconJul 26, 2022 at 8:41 p.m. UTC
Updated May 11, 2023 at 6:13 p.m. UTC

Bitcoin (BTC) declined 6% on Tuesday, approaching levels of support, or the price level that an asset does not fall below for a period of time, at around $20,500. The decline dropped BTC‘s price approximately 36% below its 200-day moving average of $32,000

Bitcoin’s downturn is occurring in conjunction with a decrease in its RSI (relative strength index) to 41. RSI is an indicator that measures the speed and magnitude of price movements. Often used as a proxy for momentum (particularly when assets are trending), levels of 70 and above are often interpreted as indicating that an asset (in this case BTC), is overbought. Levels of 30 or below often indicate that an asset is oversold.

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 equity markets, the S&P 500 sank 0.7% while the Nasdaq index decreased 1.9%. BTC correlation coefficients with the S&P 500 and Nasdaq are currently 0.73 and 0.78, respectively. For context, correlation coefficients range between 0-1.0, with higher values indicating a stronger relationship between assets.

Ether’s (ETH) price fell 11% in Tuesday trading. Its correlation coefficient levels in comparison with the S&P 500 and Nasdaq are currently 0.70 and 0.71.

Altcoins also traded in negative territory on Tuesday, with Polygon’s MATIC and Chainlink’s LINK plummeting 11% and 9%, respectively.

Latest prices

Bitcoin (BTC): $20,921 −5.5%

Ether (ETH): $1,376 −9.7%

S&P 500 daily close: 3,921.05 −1.2%

Gold: $1,716 per troy ounce −0.2%

Ten-year Treasury yield daily close: 2.79% −0.03

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

Crypto Markets Seem in Risk-Off Mode to Begin the Week

By Glenn Williams Jr.

Bitcoin showed weakness again in Tuesday trading as its price fell an additional 6%, following the 5.7% decline on Monday amid investors’ return to more risk-averse strategies.

From a technical vantage point, BTC has fallen below both the 10- and 20-period exponential moving averages (EMA). Moreover, the 10-period EMA has begun to cross below the 20-period EMA, which traders may view as being short-term bearish in nature. Bitcoin’s price is challenging the support level of $20,500, as Monday’s “Market Wrap” suggested. Intraday volume is approaching average levels over the most recent 20 days of trading, which adds credence to the strength of the move

RSI levels have fallen to 41, which most investors will likely interpret as neutral because it sits close to midway between the overbought and oversold benchmarks of 70 and 30. While no technical indicator should be viewed as solely predictive, it's worth examining BTC’s recent history when RSI levels approached 70.

So far in 2022, BTC’s RSI levels have approached or surpassed 70 on three occasions, those being February 7, March 27 and July 19 (70, 75.34, and 69.01 respectively). Looking at BTC prices 30 days after the first two instances shows declines of 13% and 16%, with the RSI falling to 40.52 and 41.78.

As it stands today, BTC is 11% below where it stood on July 19, while the RSI has fallen to 41. A repeat of recent price behavior would imply that BTC could trade within a relatively flat range over the next two to three weeks.

Bitcoin/U.S. dollar (TradingView)
Bitcoin/U.S. dollar (TradingView)

An item to examine when it comes to on-chain data is the bitcoin options put/call ratio across exchanges. For clarity, the metric divides the volume of purchased puts by the volume of purchased calls over the most recent 24 hours.

The buyer of a put is purchasing the right to sell at a certain price, whereas the buyer of a call is purchasing the right to buy at a specific price. The ratio between puts and calls can be used as an indication of trader sentiment.

As more traders look to protect themselves from potential price declines, the put/call ratio is likely to increase. The opposite holds true when traders wish to benefit from anticipated increases in price (i.e., the put/call ratio decreases).

The recent increases in the put/call ratio imply traders are purchasing downside protection to guard against further declines in price. Moreover, the motivation for doing so is at least partly to reduce exposure ahead of Wednesday’s Federal Open Market Committee meeting, where an interest rate announcement is expected, and Thursday’s release of U.S. gross domestic product (GDP) data.

Bitcoin's options volume put/call ratio (Glassnode)
Bitcoin's options volume put/call ratio (Glassnode)

Altcoin roundup

  • Tether Finds Stable Dollar Peg: The issuer’s USDT stablecoin has found stability for the first time in over two months since Terra’s collapse. While USDT has passed the market's stress test with a return to normal, concerns about its reserves will linger, one trader said. Read more here.
  • Ether Chart Outlook Sours as Price Drops: Ether's (ETH) price recently fell below $1,400, extending Monday's 10% slide, its biggest single-day percentage slide in over a month. An anticipated interest rate hike seems to be overshadowing Merge optimism. Read more here.
  • Biggie Smalls’ Estate Goes Crypto: Non-fungible token (NFT) marketplace OneOf is releasing its first collaboration with the late rap legend’s estate called “Sky’s the Limit.” The collaboration lets NFT holders vote on licensing for one of the late rapper’s famed freestyles. Read more here.

Relevant insight

Other markets

Biggest Gainers

There are no gainers in CoinDesk 20 today.

Biggest Losers

Asset Ticker Returns DACS Sector
Polygon MATIC −10.7% Smart Contract Platform
Ethereum ETH −9.7% Smart Contract Platform
Avalanche AVAX −9.4% 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.


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Glenn Williams

Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX

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Jimmy is a CoinDesk markets reporter.