First Mover: July Was a Runaway Month for Crypto Returns

Crypto traders didn’t need to work too hard to make money last month. They just had to be in the market.

Every digital asset in the CoinDesk 20 ended the month in the black. Bitcoin benefited from bets against the U.S. dollar while ether, the native cryptocurrency of the Ethereum blockchain, gained from speculation over the future of “decentralized finance,” known as DeFi.

fm-aug-3-chart-1-july-performance
Source: CoinDesk/Coin Metrics

Bitcoin rose 24% during the month, its best July in eight years, and was changing hands as of late Sunday at around $11,100 – even after a flash crash earlier in the day that saw the price plunge about $1,400 in a matter of minutes.

The largest cryptocurrency by market value continues to benefit alongside gold as the ongoing economic toll of the coronavirus raises expectations of further rescue packages and stimulus from central banks and governments. Gold, seen by many investors in traditional markets as a hedge against inflation, has been hitting new records and on Sunday was closing in on $2,000 an ounce.

The credit-rating firm Fitch on Friday placed a “negative outlook” on the United States’ triple-A rating, writing in a press release that a “resurgence of inflation” could force the Federal Reserve to raise interest rates, “adversely affecting debt dynamics.”

“Paper money hit a low versus non-quantitatively-easible money like gold and bitcoin,” Dan Morehead, CEO of the cryptocurrency investment firm Pantera Capital, wrote last week in a monthly letter.

Bitcoin is now up 56% on the year, vastly outperforming the Standard & Poor’s 500 Index, which is up 1.3% in 2020. The gauge of U.S. stocks rose 5.5% in July.

Ether, the second-biggest cryptocurrency by market value, jumped 54% in July and is now trading around $380, its highest in two years. Ethereum has become the blockchain of choice for most of the biggest projects in DeFi, where decentralized lending and trading systems have now garnered some $4.2 billion…

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