Market Wrap: Bitcoin Suffers Its Worst Month Since 2011

Hi, I'm Helene Braun, here to take you through the day's crypto market highlights and news.

June was tough for crypto markets.

Bitcoin (BTC) saw its biggest monthly price drop since 2011, 37.3%. Ether (ETH) was down 45% last month.

The declines resulted largely from a range of macroeconomic problems that has made traders risk-averse.

“This was one of the worst quarters on record pretty much everywhere across the equity market, across the bond market, across a lot of different places,” Jeff Dorman, chief investment officer at the digital-asset manager Arca Funds, told CoinDesk.

With inflation still running at a 40-year high, and because of uncertainty caused by supply-chain disruptions and Russia's invasion of Ukraine, investors across all markets are fearful, and rightfully so.

The GDPNow gauge, a popular tracker from the Atlanta Fed, showed Thursday that real gross domestic product (GDP) declined by 1% in the second quarter, which would be the second consecutive month that the U.S. economy saw negative growth, indicating that we already might be in a recession.

But it’s not all outside factors that affected the crypto market. Crypto itself suffered big shocks last month, causing declines that outpaced even major stock indexes, which continued to shed value.

Two weeks ago, Celsius’s CEL token fell in value by over 50% after announcing it was halting withdrawals, although it regained some ground by month's end to finish down only 24%.

CoinFLEX, a crypto exchange focused on derivatives trading, also paused withdrawals. Its FLEX token declined over 65% in 24 hours.

“The story should be about the [decentralized finance] platforms that have worked in service to their customers admirably and without issue, while their [centralized finance] counterparts like Celsius have blown up,” Dorman said.

A number of analysts believe bitcoin will break below the roughly $18,000-$21,000 support it held throughout June.

“A successful retest appears likely at this time and could set the base for a gradual recovery spread over a few months,” BitBull CEO Joe DiPasquale wrote to CoinDesk. “A breakdown from this range could see bitcoin trading between $13,000 to $15,000 and could send the market into a spiral that may require a longer period of time for recovery.”

A key crypto market metric known as the "Grayscale discount" is widening after the U.S. Securities and Exchange Commission rejected an application by the CoinDesk sister company to convert its bitcoin fund, the world's biggest, into an exchange-traded fund (ETF).

The shares of the Grayscale Bitcoin Trust (GBTC) are now trading at a 31% discount to the value of the underlying bitcoin, based on figures posted on the website for Grayscale Investments, the fund's manager. Prior to the SEC's decision, the GBTC discount was 28.4%.

The widening in the discount is seen as a sign of waning optimism for a conversion anytime soon – the opposite of what was happening last week, when some investors were buying GBTC, betting on the fund's chances, said Pablo Jodar, financial products manager at Storm Partners, a tech supplier for the crypto industry in Europe.

“Now, with the news that the SEC is not approving the ETF, it is having the opposite effect,” Jodar said.

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Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.