Global crypto markets fell $4 billion last week as Bitcoin trails altcoins for a third week in a row. All eyes were on Chainlink this week, as the digital asset flirted with its all time high and is benefitting from the evolution of DeFi. Traditional markets continued to rally on positive economic data and COVID-19 vaccine developments.
Cryptocurrency Markets
Global crypto markets lost about $4 billion in value last week, as Bitcoin finished the week -1.32%. Total market capitalization ended the week at $274B, and Bitcoins market dominance continued to hover around 62% throughout the week. Chainlink ( LINK ) was the market outlier, surging +28%. It is important to note that Chainlink has now posted +28% growth for two weeks in a row, as altcoins continue to gain market share from Bitcoin.
Bitcoins Price
Bitcoin finished last week -1.32%, as it was the third week in a row that Bitcoin was in the bottom 5 in terms of the top 25 cryptocurrencies by market cap. Altcoins have continued to snag market share, as Bitcoin has remained relatively quiet. Here are the following BTC performance metrics:
- 1M: -3.57%
- QTD: +0.12%
- 3M: +30%
- 6M: +5%
- 1 YR: -4.77%
The Positives
Despite Bitcoin being relatively quiet over the last 6 months, we are seeing more and more signs of a digital currency that is evolving as a “store of value.” Early on, it was difficult to assess this in an environment where the digital asset was experiencing high volatility. As of recent, Bitcoins volatility is hovering around 2 year lows. In addition, Bitcoin’s volatility continues to be lower than oil and emerging currencies on a 1 year basis. Low volatility has caused crypto traders to go elsewhere. In the report by Visionary Financial last week, it was reported that Bitcoins volume dropped -31% in June, which follows the 60 day downfall in Bitcoins volatility. It is also important to note that for the last 2 years now, Bitcoins daily transaction counts have consolidated in the 200K-300K regions. With metrics like these, it is evident that crypto users are using other digital assets for activities like payments. The lower volatility and steady transaction activities display a digital asset that is evolving as a store of value.
Additionally, not only has Bitcoin held its ground during an unprecedented pandemic, it also passed another test last week when various prominent figures got hacked on Twitter, which was labeled a “Bitcoin scam.” Despite Bitcoin only being the desired currency in the scam, it could have very well sold off based on the way it was being portrayed by the media. As a result, Bitcoins price hardly reacted, which goes to show its slow and steady maturation. If this happened 2 years ago, you would have seen a much harsher reaction.
Chainlink Surge
As discussed above, Chainlink was the crypto outlier last week, as it experienced +28% upside. More importantly, this is the second week in a row that the digital asset has rallied +28%. As mentioned on Twitter, VF was continuing to watch Chainlink as it approached its all-time high, as it was projected that LINK would make higher highs. FOMO has been injected into LINK as its one of the only digital assets that has flirted with an all-time high this year. With decentralized finance ( DeFi ) taking off in 2020, it has had a positive effect on Chainlink price. This is due to the fact that Chainlink has continued to crack partnerships with DeFi companies. According to blog posts, some of these deals involve bZx, Synthetic, Graph Protocol, Kyber Network, AVA, and many others. As mentioned in previous reports, all eyes are on DeFi as the sector has experienced epic growth this year.
Traditional Markets
Stocks had another positive week, which marks the third consecutive week of positive gains. The positive sentiment has been fueled by better than expected economic metrics, increased industrial production, and surging retail sales in June. Despite COVID-19 cases continuing to surface, positive vaccine developments have helped the markets weather the storm. Stocks are now 5% from February highs, as equities have rallied nearly +40% since the March low. Since the tedious decline in economic activity in the second quarter, the market is now on pace to put in one of the fastest recession recoveries. Due to excessive monetary and fiscal stimulus, the market has witnessed pent up demand like never before. Last week, the Dow Jones rose +2.3% and the S&P 500 did +1.2%. The S&P 500 is now -0.2% away from breaking even on a year to date basis.
Retail Sales
Economic data last week showed better than expected retail sales in June. Retail sales were up +7.5% in June, which is following a +18.2% jump in May. Markets rallied on this data, as sales beat expectations which were projected to be +5% in June. The pop comes after various businesses have restored operations after being forced to halt in March. The market will continue to watch these metrics as COVID-19 has resurfaced in many geographic areas that were not expecting a resurge. This has ultimately caused some businesses to either shut back down, or pause their reopening plans.
Industrial Production
Last week’s data showed a strong recovery in industrial production in June. Wall Street was projecting a +4.1% gain, and production posted a +5.4% surge. Despite industrial production being down -10.9% from the pre Coronavirus levels, the market is showing signs of recovery with positive data in all production sectors other than mining. Production is doing fairly well given the uncertainties in the economy right now. Despite rising cases and reopening halts, the market continues to see that “pent up demand” due to monetary and fiscal stimulus imposed by the government. It is important to note that industrial production fell -42.6% in the 2nd quarter, and is now only -10.9% away from pre COVID-19 levels. With many states still taking a cautionary stance, that just goes to show the pent up demand that was already present.
COVID-19 Vaccine
Cases in the U.S continue to show no signs of slowing down, as many investors are hoping for an approved vaccine by the end of 2020. According to data by John Hopkins, U.S. cases have now surpassed 3.57 million. In addition, more than 138,000 deaths have been recorded. Outbreaks continue to worsen across the U.S specifically in Texas, Florida, and California. Despite the disturbing numbers, investors are keeping their eyes on vaccine developments. A good portion of the bullish activity in the market right now is being fueled by vaccine developments and rumors. According to Goldman Sachs, analysts believe a vaccine will be approved before the end of the year.
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