Bitcoin and ether close July on the back foot
As July came to a close, Bitcoin dropped 1.31% to $63,870. Ether followed closely behind, declining 1.40% to $1,890. Despite these losses, the broader crypto market showed strength, with the CoinDesk 20 Index rising 8.7% for the month, marking the largest gain in over a year. This performance contrasts with equities, where Asian markets saw strong gains. South Korea's Kospi index climbed 15%, while Nasdaq 100 futures rose 1.23%, signaling a bullish trend in traditional markets.
Positive momentum for UNI and ADA
Among the few bright spots in July, Uniswap's UNI token rose 9.30% over the last 24 hours, driven by ongoing momentum from its integration with Robinhood's layer-2 infrastructure. Cardano's ADA also managed to gain 4.09% despite the generally weak environment for cryptocurrencies. UNI's open interest climbed to 75.80 million, matching levels from February 14. This increase in activity was partly fueled by BlackRock's decision to launch a tokenized Treasury fund on the Uniswap platform, boosting investor confidence in the protocol.
Bearish signals and derivatives positioning
The taker long-short futures volume ratio continues to show a bearish tilt, suggesting that market participants are more inclined to bet against rising prices. As prices drop, traders are increasingly opening short positions, especially as open interest climbs.
XRP saw a notable rise in open interest, which hit 2.27 billion tokens, the highest since late June. However, the price of XRP fell to $1.07 from $1.13 over the same period. This combination of rising open interest and falling price is a classic sign of a confirming downtrend, with traders likely shorting in anticipation of further declines.
Bitcoin’s open interest has remained static at around 750K all month, indicating that traders are hesitant to commit to leveraged products even though the market appears stable. This stagnation is also evident in ether and Solana, both of which have seen similar consolidation patterns. Most major tokens have recorded a negative 24-hour OI-adjusted cumulative volume delta, a sign that bears are taking aggressive positions, often at market orders rather than passive limit orders.
Bitcoin’s BVIV, the 30-day implied volatility index, reached 37%, the lowest level since May. These readings have historically been followed by a bounce in the so-called 'fear index,' indicating a potential shift in market sentiment. Since ETFs debuted in 2024, the relationship between BTC price and BVIV has been negative. Thus, a rise in the fear index could signal a new drop in the spot price.
On Deribit, options worth $10 billion for Bitcoin and Ether expired early Friday. The most popular remaining bet is a $60,000 put, signaling that many traders remain bearish about the market’s near-term direction.
Ethena (ENA) gained 4.31% in the past 24 hours, extending its recovery from July lows. While the token has made a strong comeback, it is still over 90% below its all-time high. In contrast, Lighter (LIT) continued its downward spiral, falling 2.28% as the correction from its July peak worsened. The token is now 20% below its recent highs, reflecting the ongoing pressure on altcoins.
Zcash (ZEC) retreated 2.15% to $459, reversing most of its earlier gains for the week. The entire privacy coin sector lost ground on Friday, with ZEC being the most notable performer among them. This trend underscores the fragility of even the more niche segments of the crypto market.
As of 4:30 p.m. ET on July 31, Bitcoin (CRYPTO:BTC) fell 2.9% to $62,929.27, Ethereum (CRYPTO:ETH) fell 2.8% to $1,866.57, and Solana (CRYPTO:SOL) fell 2.0% to $73.04. All three major coins were broadly lower on easing risk appetite. Bitcoin slipped below $63,000 as a mix of factors weighed on the crypto market, including news that three Federal Reserve board members voted to raise interest rates at Wednesday’s meeting, disappointing results from Coinbase Global (NASDAQ:COIN), and doubts that lawmakers would pass much-anticipated crypto legislation — the Clarity Act — this summer. Spot Bitcoin ETFs saw positive flows yesterday, with $233 million in inflows despite risk-off sentiment pressuring prices. The iShares Bitcoin Trust ETF remains dominant, increasing its assets under management by $183 million. Banco Santander (NYSE:SAN) disclosed yesterday that it held $4.31 million in shares in the popular Bitcoin ETF as well as around $3.54 million in the iShares Ethereum Trust ETF (NASDAQ:ETHA).
Cryptocurrency prices slid this week, pressured by increasing geopolitical tensions, interest rate speculation, and a narrowing window for the Senate to pass the Clarity Act. Coinbase’s earnings miss didn’t help: the stock tumbled over 10% following disappointing results, largely due to low crypto trading revenues. However, to put crypto’s struggles in context, equities have also had a rough few weeks — indeed, Bitcoin gained 4.3% in July while the Nasdaq Composite (NASDAQINDEX:^IXIC) fell by 3.2%. Broader progress, such as Morgan Stanley (NYSE:MS) launching new crypto ETFs this week, has helped crypto pull away from a disastrous June.