The latest moves in crypto markets, in context Was this newsletter forwarded to you? Sign up here. |
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Good morning, and welcome to First Mover. I'm Lyllah Ledesma here to take you through the latest in crypto markets, news and insights. In today’s newsletter: Price Point: Bitcoin was lower for a fifth straight day, dashing hopes that the largest cryptocurrency might soar past $25K. Some traders are starting to worry about a move below $22K.
Market Moves: A bullish trendline on bitcoin’s price chart has been breached on the downside, potentially a result of the Federal Reserve’s hawkish meeting minutes released Wednesday. Chart of The Day:A key indicator in the bitcoin options market known as “skew” shows renewed demand for puts, or contracts offering protection from price drops. |
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Bitcoin (BTC) was trading relatively flat on the day, down 1%, in the fifth straight day of losses for the world’s largest cryptocurrency. Ether (ETH) also was down. BTC was around $23,500 and has lost momentum from the $25,000 mark reached Monday. Traders are speculating that a move below $22,000 might suggest the rally has run its course for now. ETH is moving in a similar direction, down 2% on the week and struggling to remain above the $1,800 mark after hitting highs of $2,000 earlier in the week.
Privacy token monero (XRM) was one of the only gainers in altcoins today, trading up 4% over the last 24 hours. Cosmos (ATOM) was trading up at 3%.
In traditional markets, stock futures edged up as investors awaited economic data including jobless claims, home-sales figures and other major earnings reports. In the news, a new study found that insider trading was a bigger issue than previously thought at cryptocurrency exchange Coinbase, suggesting market regulators seeking to police trading may have more work ahead of them. The paper found suspicious trading around 10% to 25% of new crypto listings and says the problem goes beyond the instances in a U.S. Department of Justice case brought in July. According to JPMorgan analyst Kenneth Worthington, Coinbase is positioned to benefit from the Ethereum Merge as institutional and retail clients get value from staking ether. In Latin America, Colombia is considering the introduction of a central bank digital currency (CBDC) to facilitate transactions and reduce tax evasion. As part of a tax reform program, the government of the South American country also plans to impose limits on cash transactions. And, Solana’s biggest DeFi lender is leaning into “permissionless” loan markets. These “permissionless pools'' don't have any of the safeguards afforded to Solend’s whitelisted markets. |
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Bitcoin Loses Bullish Trendline as Fed Sees Restrictive Rates Needed for Some Time By Omkar Godbole. |
Bitcoin lost a key price support after the minutes of the Federal Reserve's July meeting dashed hopes that looser monetary policy is set to return to the U.S. next year. The leading cryptocurrency fell more than 2% on Wednesday, dropping below a bullish trendline drawn from July 15 and July 26 lows. The breakdown sparked concerns of a deeper sell-off on social media. Fed minutes released late Wednesday showed policymakers discussed the need to continue raising interest rates to keep borrowing costs at levels that restrict U.S. economic growth for long enough to tame inflation. The cryptocurrency is sensitive to changes in Fed policy and has halved since the central bank kicked off its tightening cycle in March. The push for continued rate hikes and restrictive policy contradicts recent market pricing, which had indicated expectations of interest-rate cuts in 2023 and lifted bitcoin to a two-month high of $25,203. The surprise may also inject volatility into markets. "It seems reasonable that increasing and elevated rates are headwinds for bitcoin," said Lewis Harland, a researcher at Decentral Park Capital. "The Fed appears to keep consistent in their inflation north star and the cost seems like an economic contraction." Traders of Fed fund futures no longer see the central bank switching to rate cuts next year, according to Mott Capital Management's Michael Kramer. Traders expect rates to peak around 3.7% by March and remain there until late 2023. Last month, the central bank raised the benchmark interest rate by 75 basis points (0.75 percentage point), lifting it to the 2.25%-2.5% range. Read the full story here. |
Chart of The Day by Omkar Godbole: Bitcoin Skew Shows Renewed Demand for Puts |
The one-month put-call skew, which measures the cost of puts (bearish bets) relative to calls (bullish bets) expiring in four weeks, is rising again, indicating renewed demand for puts. Positive values indicate puts are pricier than calls, a sign of investors seeking downside protection.The one-month skew turned neutral early this month after rising as high as 35% in June. |
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The following are the biggest movers in the CoinDesk 20 digital assets over the past 24 hours: |
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Biggest Gainers Biggest Losers |
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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. |
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Nauman Sheikh, Managing Director, Head of Treasury Management and Derivatives Trading
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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
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