Bitcoin․com Exchange Market Insights Report for June 2022
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Loading... - Axel Koopman
- 23 Jun 2022
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This is the June 2022 monthly market insights report by Bitcoin.com Exchange. In this and subsequent reports, expect to find a summary of crypto market performance, a macro recap, market structure analysis, and more.
Crypto Market Performance
Crypto markets continued on a downtrend as BTC and ETH were down 30% and 44% respectively over the last 30 days.
The macroeconomic outlook continues to be unfavorable for risk assets as high inflation combines with elevated commodity prices and tight U.S. labor market conditions. Adding to that, crypto has experienced a credit crisis as major borrow/lend players such as Celsius, 3AC, and Babel Finance have gone insolvent.
Despite the big losses seen on BTC and ETH, some large cap assets have held strong. Out of the top 50 assets by market cap, Helium performed most positively, gaining 33% over the last 30 days. LEO was up 11.20% and LINK remained practically unchanged. The largest underperformance was seen by AVAX which was down 44%, Bitcoin Cash (down 39%), and Cronos (down 40%).
Macro Recap: Commodities Pressure Despite Central Banks Actions
In the latest FOMC meeting, for the first time since 1994, the U.S. Federal Reserve increased rates by 75 basis points. This was on the back of continued high CPI data, which came in at 8.1% for May 2022 (the highest since 1981). Labor conditions in the U.S. remain tight as April numbers (released on June 1) showed job openings came down only slightly to 11.4M after posting record highs of 11.8M for March. Chairman Powel hinted at another rate hike of between 50 to 75 bps, which would be announced in the FOMC’s July 2022 meeting.
As central banks tighten, supply chain issues combined with political instability continue to push commodities prices higher. Oil led the way, with light oil futures reaching $120 USD per barrel before stabilizing above $105 in the latest trading sessions. Supply/demand continues to balance towards higher demand. Despite some demand destruction from high oil prices, the supply chain constraints due to sanctions against Russian exports have kept supply tight.
Market Structure: Forced Capitulation A Sign Of Local Bottom?
BTC markets have seen two forced sell offs of significant size in a month’s time span. First was the liquidation of assets by Luna Foundation, which sold up to 80,000 BTC, along with considerable sums of ETH and other liquid assets. Second was the credit crisis and liquidation of Celsius, 3AC, and Babel Finance. Crypto market capitalization dropped by $2.1T from the all-time-highs reached in November 2021.
This has put pressure on miners, who are also facing increased electricity costs. As prices continue to declinem, we can see that the profitability for miners diminishes. According to Glassnode’s difficulty regression model, the “all-in sustaining cost” of mining currently sits at $17,800, which is approximately where BTC traded last weekend. Read More...
