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ETFS 21Shares Crypto Monitor - 3rd August 2022

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This Month in Crypto: Executive Summary

The total cryptoassets market cap increased by 22.3% month-over-month, according to data gathered by CoinMarketCap. The jump was influenced by the excitement raving around the Merge, which finally got a tentative launch date. As shown in the figure below, DeFi protocol Lido saw 313% returns over the past 30 days, while Ethereum scalability solution Optimism saw 168%. In the meantime, Bitcoin and Ethereum respectively saw an 18% and 47% increase over the past month. Moreover, the correlation between Bitcoin and S&P 500 stood at 0.5 in mid-July, down from 0.6 levels for two months.

Figure 1: Price and TVL developments of the major crypto categories

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Source: 21Shares

Key Takeaways:
  • UK published bill regulating stablecoins

  • Merge got a launch date, Ethereum holders hoard

  • Developments on stablecoins

  • Uniswap onboarding NFT marketplaces on its DEX

  • Luna, Celsius, and the Three Arrows Capital contagion

Macro, Regulations; Spot, and Derivatives Markets

US inflation was recorded at 9.1%, and was followed by the Federal Reserve raising interest rates by 75 basis points for the second time in a row to reach a total of 2.5%. UK inflation hit a 40-year high of 9.4%, with the main contributors being soaring energy prices which are expected to increase sharply in October. While the Bank of England is scheduled to hike interest rates in August, the European Central Bank (ECB) went ahead with a 50 basis points interest rate hike, its first since 2011, which raises rates to 0% putting an end to the eight years Europe has been experimenting with negative rates. ECB will most probably introduce another rate hike in September. In the figure below, we can deduce that inflation rates globally are close to those of the late 1970s.

Figure 2: Inflation rates over the years

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Source: Bridge