Aug 1, 2023

Bitcoin (BTC) is starting the month of August below $29,000, having lost roughly 5% in the past 30 days.

Video transcript

Bitcoin is currently trading below $29,000 losing roughly 5% in the past 30 days. Well, joining us now to discuss how the crypto markets performed in July is Coindesk indices. Head of research Todd growth. Welcome Todd. Thanks for having me. Glad to have you back. So, uh of course, you say that the main catalyst for the month was actually ripple's partial court victory against the SEC. Can you unpack that for us? And uh well, I guess it, how, how did it do relative to? Oh, I don't know the ETF situation that happened in June? Uh Sure. Yeah. So I think what we had in, in um uh in, in July was a reversal of the Bitcoin dominance. We saw from all the positive headlines in, in June, uh most notably the Black Rock ETF filing. Uh and really, um while the, while the uh ripple outcome was um it was, it was partly positive there, there were, it was still deemed a security to the initial investors because of the contract uh involved in the initial sale of Rle. Uh what it basically did was it um it allowed for a lot of the al alt coins to catch up with where bit uh Bitcoin was. Uh and, and even Ethereum relative to uh the smaller cap universe. And so with that, um as you mentioned, Bitcoin down 5% Ethereum down 3% on the month. Uh but the broad CM I which is Bitcoin Ethereum market cap weighted. So those are large tokens within CM I uh CM I was uh was only down about 1%. And that was really driven by uh computing sector uh D I and uh uh digit digitization which uh have the smaller tokens uh relative to currency and smart contract platform where Bitcoin and Ethereum reside. So that analysis makes a lot of sense. I'm just curious, like in your observation though, my personal observation is that whatever the SEC does doesn't seem to affect Bitcoin that much. Now, what you're talking about a little bit is different because it's like ripple and all coins. But I'm just curious if you share that view because I, you know, sometimes like even when the SEC, you know, in the coin base and the Binance lawsuits, they named all these different all coins. Like, I mean, I guess, I guess it affected those coins. Yes, but it doesn't really seem to affect Bitcoin that much. I mean, do you agree with that statement? Uh Absolutely. I mean, you, you even look at what came out with uh coin base. Uh the, the dialogue between coin base and, and, uh, and the SEC, it was, uh, deal with everything except for, for Bitcoin. And I think Bitcoin is more global, more decentralized in that sense when these individual targeted, uh, um, investigations and actions occur. Um, it's very specific towards, uh, towards, uh, tokens outside of the, of the, of Bitcoin and to some extent, Ethereum. I, I think Ethereum is still, there could be a tail case where the SC goes after Ethereum as, as security. But it, it seems it's always a, an X Bitcoin, uh, ex Bitcoin event to exactly to your point. And if you could, uh, just talk to us a little bit about the broader macro factors, particularly the interest in central banks, interest rates. What's been going on? What have you seen? Uh Sure. Yeah. So we had, we had the July FO MC which, uh, 25 bits as, as consensus. Um, there was a little bit more hawkish communication towards the end. It sounds like we're gonna have to have higher rates for a little bit longer. Um, I think there, the committees are still split between the doves and the hawks, but it seemed on, on the, on the margin. It was a little bit more of a hot, a hawkish rhetoric just to make sure that the markets wouldn't get, uh, overly, uh, do I, uh, uh, take from it? And then last, last week, uh I think what was notable was the bank of Japan, adjusting the yield curve control uh to allow for the 10 year uh G GB to uh to stay within, within their, their target. But then allow for rates up to 1%. So effectively reinflating, reinflating a lot of yield into the J GB curve. Now, it's still, it's still negative, it's still negative really yield uh if inflation is 2%. Uh But that, that's, that's meaningful because that is of the different central bank um uh programs. The Bank of Japan is, is furthest out in terms of just uh of, of, of yield suppression across the curve. Uh So that was notable to see the uh the boj uh relinquish some of the control that they've had on, on that market. Uh And whenever we see rising rates and we've seen this globally across the US Europe and the Japan curve, whenever we have rising nominal and real real yields, that's generally negative for crypto as crypto is viewed as a, as an alternative better in a zero interest rate environment. Um But that negative macro uh effect is offset by what we're seeing to see continued us dollar weakness. Uh and more broadly, just still positive risk sentiment for uh for um both equities and, and credit uh within the US. All right. Uh Well, thanks so much for that, Todd. Uh that was kind as in head of research, Todd

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