CoinDesk Monthly Review
15
JUL CoinDesk Monthly Review July 2020
Transcript of CoinDesk Monthly Review
JULCoinDesk Monthly ReviewJuly 2020
Returns, volume, volatility and correlations
Bitcoin’s volatility returned, along
with outperformance vs. stocks,
bonds and gold
Returns
Monthly Review: July 2020
In the opening weeks of July, it looked like gold would surpass bitcoin for monthly returns, as it reached an all-time high, a frustrating state of affairs for those who believe the current macro situation should be a “perfect storm” for bitcoin’s “gold 2.0” narrative. That was before bitcoin shot up nearly 20% in the final week of the month, for a 24% monthly return at the close of the period.
Performance of Bitcoin & Macro Assets
Source: Coin Metrics, FactSet; Stocks = S&P 500, Bonds = iShares Barclays 20+ Yr Treas. Bond, Gold = SPDR Gold Trust.
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Bitcoin Stocks Bonds Gold
Volatility
Monthly Review: July 2020
Bitcoin’s volatility has been seen as an impediment to its adoption as money, or as a store of value. Investors holding bitcoin in July may have found themselves relieved to see its return.
Bitcoin and Macro Assets: 30d Volatility of Daily Log Returns
Source: Coin Metrics, FactSet; stocks = S&P 500, Bonds = iShares Barclays 20+ Yr Treas. Bond, Gold = SPDR Gold Trust.
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Bitcoin Stocks Bonds Gold
CorrelationsBitcoin kept its abnormally consistent level of weak positive correlation with gold and stocks until July 20, when BTC began a run-up that would take it above $11,000 by the end of the month. Despite that breakout, it remains more consistently correlated with gold and stocks than it has in the past, raising questions about its role in diversified portfolios.
Bitcoin & Macro Assets 90d Correlations of Daily Log Returns
Monthly Review: July 2020
Source: CoinDesk BPI, FactSet; Bitcoin price at 4pm Eastern; Stocks = S&P 500 Index; Bonds = iShares 20+ Year Treasury Bond ETF; Gold = SPDR Gold Trust.
-0.3-0.2-0.10.00.10.20.30.40.50.6
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Stocks Bonds Gold
VolumeVerifiable volume traded on crypto exchanges reached $154.5 billion in July, following June’s doldrums. This chart includes exchanges with a high granularity of trade data and full history according to Nomics’ exchange transparency rating criteria. Measures like Nomics’ transparency rating filter out some fake volume, but undoubtedly ignore some volume that is very real (read more).
Verifiable Monthly Dollar Volume on Crypto Spot Exchanges
Monthly Review: July 2020
Source: Nomics ‘transparent’ volume
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Returns, crypto assets
Monthly Review: July 2020
Chainlink (LINK) in July stayed in the top part of the returns table, after recording 103% returns in the second quarter, less than only 0x (ZRX), which peaked near 50% at the first week of the month, before falling back. Software platform coins ether (ETH) and Stellar lumens (XLM) were also standouts, doubling bitcoin’s (BTC) impressive returns on the month. Learn more about the full CoinDesk 20 list of assets at coindesk.com/coindesk20
Monthly Performance of Assets in the CoinDesk 20
Source: Nomics
Stablecoins’ Impact
Stablecoins, in particular tether,
have replaced bitcoin and ether
as quote currencies; tether’s
impact on Ethereum offers insight
into how users respond to
transaction fees
Quote currency dominance
Monthly Review: July 2020
Tether is now the dominant quote cryptocurrency; bitcoin remains relevant as a quote currency and increases proportionally to tether during volume growth periods; ether is all but out of the picture as a quote currency.
Daily Aggregate Quote Currency Volume for BTC, ETH and USDT
Source: Nomics; excludes exchanges with Nomics transparency rating below “A”
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Tron % of tether transferred Ethereum % of tether transferred ETH median tx fee (RH axis)
Impact on fees and network choice
Monthly Review: July 2020
As ethereum fees grew by an order of magnitude, fee-free Tron has at times increased its share of tether transferred, but it hasn’t yet broken into new territory, and Ethereum remains the dominant network for tether transfers. For context, the daily median tether transfer on Ethereum is nearly $500.
Tether Transferred on Tron and Ethereum Fees Vs. Time
Source: Coin Metrics
Privacy coinsTwo out of three privacy-focused
cryptocurrencies listed in the
CoinDesk 20 are outperforming
bitcoin
Privacy coins: ReturnsThe world got a demonstration of Bitcoin’s transparency, when a hacker took over the Twitter accounts of powerful individuals and companies, and used them to solicit bitcoin contributions to a scam charity. The CoinDesk 20 offers a window into three crypto assets that have captured investor interest, which aim to duplicate many of Bitcoin’s features, but with transactions and transaction participants hidden from outside scrutiny.
Monthly Review: July 2020
Source: Coin Metrics, FactSet; Stocks = S&P 500, Bonds = iShares Barclays 20+ Yr Treas. Bond, Gold = SPDR Gold Trust.
Performance of Dash & Macro Assets Performance of Monero & Macro Assets Performance of Zcash & Macro Assets
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Dash Stocks Bonds Gold
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Monero Stocks Bonds Gold
Privacy coins: Volatility
Monthly Review: July 2020
Dash (DASH) and zcash (ZEC) saw a surge of volatility in January, but other than that, the volatility of these privacy coins and monero (XMR) has tended to track bitcoin’s at a somewhat higher rate.
Bitcoin, Dash, Monero & Zcash: 30d Volatility of Daily Log Returns
Source: Coin Metrics
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BTC DASH XMR ZEC
Privacy coins: CorrelationsPrivacy coins like dash (DASH), monero (XMR) and zcash (ZEC) were invented to add privacy properties to bitcoin’s feature set. If that was a differentiator, the market doesn’t know it: like other crypto assets, privacy coins tend to correlate closely with bitcoin’s price moves, although there was a period in January when it looked like dash and zcash might break away.
Bitcoin & Privacy Coins 90d Correlations of Daily Log Returns
Monthly Review: July 2020
Source Coin Metrics
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CoinDesk Research is an investor-focused team of crypto data analysts, engineers and writers. Our aim is to build products, innovate metrics and create editorial content that serve all types of cryptocurrency investors. For more reports on the crypto investing landscape, visit coindesk.com/crypto-investment-research. You can get in touch with us to learn more at:
E: [email protected]: @coindeskdata
This report has been prepared by CoinDesk solely for informative purposes. It should not be taken as the basis for making investment decisions, nor for the formation of an investment strategy. It should not be construed as investment advice or as a recommendation to engage in investment transactions. The information contained in this report may include or incorporate by reference forward-looking statements, which would include any statements that are not statements of historical fact. No representations or warranties are made as to the accuracy of these forward-looking statements. Any data, charts or analysis herein should not be taken as an indication or guarantee of any future performance.
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