Market Wrap: Cryptos Decline Amid Choppy Trading, DeFi Tokens Underperform

Aversion to risk remains as volatility returns to stocks and cryptos.
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Bitcoin (BTC) traded in a choppy range over the past week as volatility ticked higher. That could reflect uncertainty among crypto traders.

BTC was down by 3% over the past 24 hours and is roughly flat over the past week. Meanwhile, several alternative cryptos (altcoins) underperformed on Friday. For example, Solana’s SOL token was down by 5%, and Avalanche’s AVAX token was down by 4% over the past 24 hours.

On the macroeconomic front, some analysts expect selling pressure to wane in stocks, which could benefit cryptos short term. Bitcoin has been increasingly correlated with the S&P 500 over the past year.

“It is premature to worry about an approaching recession until the bond market and central banks push monetary conditions into restrictive territory, which we do not expect in 2022,” MRB Partners wrote in a Friday email. The firm expects a window of opportunity for equity markets to rebound as global growth conditions prove resilient, assuming interest rate expectations and bond yields calm down soon.

Latest prices

Bitcoin (BTC): $29,278, −2.48%

Ether (ETH): $1,968, −1.58%

●S&P 500 daily close: $3,901, +0.01%

●Gold: $1,844 per troy ounce, +0.12%

●Ten-year Treasury yield daily close: 2.79%

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

DeFi underperforms

Decentralized finance (DeFi) tokens have underperformed bitcoin over the past month. Typically, DeFi and other altcoins underperform in a down market because of their higher risk profile relative to bitcoin.

The CoinDesk DeFi Index (DFX) is down by 33% over the past month, compared with a 23% decline in the CoinDesk Bitcoin Price Index (XBX) over the same period.