coindesk.com
Good morning. Here’s what’s happening:
Prices: Bitcoin is shrugging off a downgrade of U.S. Government debt by FitchInsights: How quickly times change. Bitcoin dominance sagged in July after rising in June. CoinDesk CDI Head of Research Todd Growth explained why.
Prices: Bitcoin Bounds Over $30K After Debt Downgrade, MicroStrategy Filing
Both bitcoin and ether are beginning the Asia trading day in the green, with the world’s largest digital asset up 2.2% and ether up 0.8% as markets in the East open in the red after Fitch downgraded the U.S’. long-term ratings to AA+ from AAA.
The CoinDesk Market Index (CMI) is up 1.43% to 1,286.
This downgrade comes at a time when companies are reporting relatively positive earnings, which is why the market doesn’t seem to be as panicked as it was in 2011 when S&P downgraded U.S. debt.
In the middle of Q2 2023 earnings season, the S&P 500 has seen a greater proportion of companies reporting positive earnings surprises, according to Factset. This is in contrast to 2011, where stocks generally performed poorly, and news of the then-downgrade caused a panic.
Back in 2011, bitcoin wasn’t really a mature asset class, and there wasn’t the same trading volume making the quality of correlation to macroeconomic events poor.
But how did it perform when the downgrade happened?
Mixed. On August 6, 2011, it was down 33% to $6.6, but the next day it jumped by 20% to $7.9. Although, between the two days, there was only $200,000 in trading volume.
Biggest Gainers
| Asset | Ticker | Returns | DACS Sector | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Gala | GALA | +14.1% | Entertainment | XRP | XRP | +10.5% | Currency | Terra | LUNA | +7.0% | Smart Contract Platform |
InsightsA July Decline in Bitcoin Dominance
Bitcoin dominance waned in July after gaining ground the previous month, CoinDesk Indices Head of Research Todd Groth told "First Mover" TV hosts on Tuesday.
Groth tied the trend reversal to an absence of the sort of catalysts that drove bitcoin's price dramatically higher in June, and Ripple's partial win last month in an ongoing court case with the Securities and Exchange Commission (SEC) that buoyed altcoin investors. The decision in U.S. federal court found that the sale of Ripple’s XRP tokens on exchanges and through algorithms did not constitute investment contracts and raised hopes that the SEC could not deem other tokens as securities.
"What it basically did was allowed for a lot of the altcoins to catch up with where bitcoin was, and even Etherium relative to the small cap universe," Groth said.
In the days following the ruling, Coinbase, Kraken and other exchanges re-listed or announced plans to reopen trading of XRP and trading of the token mushroomed. Meanwhile, bitcoin slogged steadily downward to finish July off 5%, the second monthly decline in an otherwise upbeat year. The BTC dominance rate in July sank below 49% in July after rising over 52% near the end of June. The CoinDesk Market Index was off only about 1%.
"That was really driven by (the) computing sector, DeFi and digitalization (sectors), which have the small tokens relative to currency and smart contract platforms where bitcoin and Etherium reside," Groth said.