By the CoinDesk Markets Team Edited by Bradley Keoun
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TODAY:Bitcoin (BTC) -0.9% $11,321 | Ether (ETH) -1.5% $373 (@11:52 UTC)Price Point: Bitcoin was lower, now in a range between $11K and $11.5K.Market Moves: There's a lot of money to be made in and around maturing Ethereum-centric markets, where a "bear market" means prices double. Bitcoin Watch: So-called doji candle appears in price charts, suggesting market has turned indecisive, CoinDesk's Omkar Godbole writes. What's Hot: Stimulus chances fade, Ethereum's Buterin pushes layer 2 scaling, Federal Reserve's Treasury spree looks "indefinite."
PRICE POINT
Bitcoin was lower, its sixth straight day in a range between about $11,000 and $11,500. "The crypto community is experiencing a lull lately," Mati Greenspan, founder of the cryptocurrency and foreign-exchange firm Quantum Economics, wrote Wednesday in a note to clients. In traditional markets, Asian and European indexes slid and U.S. stock futures pointed to a lower open as hopes faded for a new stimulus package from Washington before next month’s presidential election. Gold was lower at $1,896 an ounce.
MARKET MOVES
Cryptocurrency markets are sending strong signals right now that the innovations coming from fast-emerging technologies like decentralized finance, or DeFi, could shake up the global order of banks and money managers and insurance companies. A recurring theme at CoinDesk's "invest: ethereum economy" virtual conference Wednesday was just how much money there is to be made in the fast-growing digital-asset industry. Talk of returns and yields was salted throughout the technical discussions of protocols and governance systems and blockchain arcana like "layer 1" and "layer 2" and "rollups" and "shards." Even traditional-market regulators are starting to acknowledge the growth possibilities that cryptocurrency bulls have been betting on for years. The technological movement is "obviously revolutionary, and I think at the end of the day could lead to a massive disintermediation of the financial system and the traditional players,” Heath Tarbert, chair of the U.S. Commodity Futures Trading Commission, told CoinDesk Chief Content Officer Michael Casey. (Link here to the video interview.) DeFi, in which developers are using open-source software to create semi-automated lending and trading systems atop blockchain networks, proved its potential in recent months as projects like Compound and Uniswap attracted billions of dollars of crypto collateral. A series of "yield farming" projects like Yearn.Finance have made it easy to rack up extra token rewards, a way of juicing fixed-income returns in digital-asset markets. The crypto industry appears to have emerged from its larval phase into the pupal: The form is taking shape, but coming-of-age challenges are yet to be overcome, from reliability to marketing and of course scaling to the point where millions of users can be accommodated. There are steep risks, as with the past few months' flame-outs of DeFi projects like SushiSwap, whose founder suddenly decided to cash out tokens at the top of the market, crashing the market, and Yam, which succumbed to a bug. "In many cases you can risk permanent loss of your capital by participating in some of these activities," Ryan Watkins, a senior research analyst at Messari, said on one of the panels. And it's premature to compare the scale of cryptocurrencies to the traditional financial system. “Today, 99.9% of the money is still in fiat,” Binance CEO Changpeng "CZ" Zhao said in a one-on-one session with journalist Leigh Cuen, during the CoinDesk conference. “We still need gateways.” Those too are starting to emerge. Bloq, a blockchain infrastructure firm led by former CNN.com web developer Jeff Garzik, is rolling out a new product that allows users to earn money by buying customized "holding pools" of digital assets, CoinDesk's Jaspreet Kalra reported Wednesday. "The future is dynamic portfolios that are expensive to construct in traditional finance," said Tarun Chitra, CEO of Gauntlet, a simulation platform for crypto networks. His Zoom feed was the most colorful by far: Gauntlet's Tarun Chitra speaks on a CoinDesk virtual panel Wednesday. (CoinDesk) Another company, Blox, plans to help customers pool ether (ETH) to get past a threshold needed to "stake" on the Ethereum blockchain. Staking is similar to holding an interest-bearing deposit and will go live with a major upgrade purportedly to arrive by the end of 2020. But annual returns could range from 4.6% to 10.3%, CoinDesk's Sebastian Sinclair wrote. Compare that with the 0.01% offered on a JPMorgan Chase savings account. In one of the panels at the conference, David Hoffman, founding father of the DeFi-focused publication Bankless, mapped out the bullish case for ether and said prices could climb to $10,000 or higher, from about $380 now. In a subsequent session, Vishal Shah, founder and CEO of the crypto derivatives exchange Alpha5, mapped out the bearish case but concluded by saying prices could double under that scenario. Ether prices have already tripled this year. The lofty valuations might just be hype. Or they might be a sign that cryptocurrency traders are looking ahead to the industry's maturation.
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BITCOIN WATCH
Bitcoin daily chart. (TradingView) The bitcoin market has turned indecisive, according to Wednesday's doji candle. Key indicators like the 14-day relative strength index remain biased bullish. Additionally, the 5- and 10-day averages continue to trend north, indicating the path of least resistance is to the higher side. From the macro perspective, the rising stockpile of the global negative-yielding debt is a major bullish development for perceived inflation-hedges or store of value assets like bitcoin. "Going forward, the search for yield is likely to be a major driver of growth in bitcoins price and adoption," Stack Fund's CEO Matthew Dibb told CoinDesk in a WhatsApp chat. Further, recent disclosures of bitcoin holdings by payments company Square and Stone Ridge Asset Management has validated the cryptocurrency's appeal as an alternative investment. As such, odds appear stacked in favor of a continued bull run. That said, in the short-run, the cryptocurrency remains vulnerable to sell-offs in the global equity markets. At press time, bitcoin is trading in the red near $11,340. - Omkar Godbole Read More: World’s Growing Stockpile of Negative-Yielding Debt a Positive for Bitcoin, Say Analysts
WHAT'S HOT
Ethereum's Vitalik Buterin calls on power users to move to layer 2 scaling. (CoinDesk) Grayscale (owned by CoinDesk parent Digital Currency Group) raises $1B across all products in 3Q. (CoinDesk) U.S. Justice Department's 83-page cryptocurrency enforcement framework is shot across the bow to international exchanges. (CoinDesk) Algorand’s new Europe accelerator to boost startups with up to $500K in funding. (CoinDesk)
ANALOGS The latest on the economy and traditional finance
Hopes fade for a U.S. stimulus package. (CNBC) Federal Reserve vice chair says it's an "open question" whether U.S. central bank will have to keep buying Treasury bonds indefinitely. (WSJ) Pandemic response will drive up global public debt to a record, IMF says. (WSJ) The world's biggest economies have extended a program allowing the poorest nations to suspend debt repayments. (WSJ) Finance chiefs of five biggest U.S. lenders have mixed views on Covid economy. (Reuters)
TWEET OF THE DAY
CoinDesk is partnering with DC Fintech Week, one of the world’s premier policy and regulation-focused digital currency conferences, to produce a special edition of CoinDesk Live.
The virtual event, which runs Oct. 19-22, brings together marquee names from Switzerland’s FINMA, Sweden’s Riksbank, the Bank for International Settlements, the U.S.’ Commodity Futures Trading Commission and the International Monetary Fund to discuss stablecoin regulation, central bank digital currencies, the future of money and more.
In the run up to our invest: ethereum economy event Oct. 14, get up to speed on recent developments in the Ethereum ecosystem. CoinDesk Research's recent note covers ETH's performance, the impact of decentralized finance and stablecoins, and an update on the launch of Ethereum 2.0.
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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