While July has traditionally delivered solid returns for bitcoin (), 2023 has left much to be desired, with the month’s malaise continuing on Wednesday.
The Bitcoin Fear & Greed Index has declined to 50 from 64 a week prior, indicating neutral sentiment among traders – perfectly reflecting the relative lack of action of late.
Though nearly two weeks remain in the month, BTC’s daily average returns this July of negative 0.096% have been its second lowest of 2023, behind only May. Similar price action applies to ether () at negative 0.07%, with that crypto now on track to post its first losing month of the year.
Historically, average daily performance in July for bitcoin and ether are a positive 0.105% and 0.46%, respectively.
In some ways, it’s difficult to take issue with the relative lack of performance. Bitcoin and ether have essentially decoupled from everything, including once strong correlations to traditional equity indexes that have essentially disappeared.
There’s also the dissipation of a previously strong inverse relationship between bitcoin and the U.S. dollar index, which runs counter to the narrative of BTC serving as an inflation hedge.
One relationship that remains strong is that between BTC and ETH, but even that correlation has declined to 70% in 2023 vs. "normal readings in the 90% area.
Absent January and March this year, daily performance for bitcoin and ether have been relatively pedestrian, with the cryptos’ outperformance in 2023 for now being solely a first quarter story.
While there was a 20% advance for bitcoin in mid-June on the heels of BlackRock’s filing for a spot bitcoin ETF, there’s been a lack of new catalysts since, and a check of the docket doesn’t show any new catalysts immediately on the horizon.
It’s possible Thursday’s initial jobless claims figures may provide some additional context to the overall macroeconomic picture, with a read above consensus forecasts for 242,000 suggesting possible further easing in inflation and Federal Reserve rate hike forecasts.
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Investors looking for a glimmer of bullish sentiment may find it in the CoinDesk Indices Trend Indicator (BTI) for both BTC and ETH. Currently, the BTI is signaling “uptrend” for both assets. Still, given the usage of short term moving averages in calculating the indices’ signals, both could fall into neutral territory in short order.
Edited by Stephen Alpher.
