Payrolls Preview: Bitcoin Steady, Metaverse Tokens Drop

The latest moves in crypto markets, in context

February 4, 2022

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Good morning, and welcome to First Mover. Here's what's happening this morning:

Featured story: Metaverse tokens drop.

And check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9:00 a.m. U.S. Eastern time. Today's show will feature guests:

Baron Davis, former NBA All-Star and serial entrepreneur

Today's newsletter was edited by Omkar Godbole and produced by Parikshit Mishra.

Market Moves

By Omkar Godbole

Bitcoin continues to trade in familiar ranges as the U.S. dollar loses ground ahead of crucial economic data that may validate the Federal Reserve's (Fed) rate hike plans.

The top cryptocurrency was locked in the recent trading band of $36,000 to $39,000 at press time. The dollar index, which tracks the greenback's value against majors, nursed marginal losses at 95.22, having peaked near 97.50 on Jan. 27.

The nonfarm payrolls figure scheduled for release at 13:30 GMT is expected to show the pace of job additions in the U.S. economy slowed to 150,000 in January from 199,000 in December, according to FXStreet.

While the jobless rate is expected to remain unchanged at 3.9%, the average hourly earnings are forecast to rise by 5.2% following December's 4.7% increase.

Weaker-than-expected data may see traders scale back bets of aggressive monetary tightening by the Fed, pushing the dollar lower and boosting bitcoin and other risk assets.

However, other central banks appear to be following the Fed's lead. The European Central Bank is now expected to deliver two rate hikes this year. The Bank of England raised borrowing costs by 25 basis points on Thursday. So, bitcoin's recovery rally may be shallow.

At the same time, a strong payrolls data may not do much damage to the cryptocurrency as much of the bad news appears to have been priced in. Since mid-November, bitcoin has declined by 45% while the Fed has gone from signaling one rate hike in 2002 to four. The Fed funds futures are priced for five rate hikes this year.

Metaverse Tokens Plummet

By Shaurya Malwa

Metaverse-related tokens took a hit in the past two days as Meta, formerly known as Facebook, reported a $10 billion loss on its augmented and virtual reality division in an earnings release earlier this week.

The metaverse broadly refers to a virtual world in which people can interact as they do in the real world, but digitally.

Tokens of blockchain-based games Axie Infinity (AXS), The Sandbox (SAND), and Gala (GALA) fell as much as 12% in the past 24 hours, continuing a slide since Wednesday night.

In early Asian hours on Thursday, AXS fell to under $46 before slightly recovering to $49 in afternoon hours. It traded over $53 before Meta’s earnings release on Wednesday. AXS now sits at support levels last seen in September 2021, before the tokens began a multi-month run to all-time highs of $162 in November.

The drop in token prices was coupled with falling user activity on Axie Infinity, crypto research firm Delphi Digital found, partly in connection with the game’s native Smooth Love Potion (SLP) tokens.

“As SLP prices dip, players suffer as they cannot earn as much when compared to a few months back,” Delphi analysts said in a note. “At its peak, a player could have earned $35 per day on July 21 vs $1 today at current prices (assuming 100 SLP/day). This has led many players to stop playing as the income has been reduced massively.”

Full story here: Metaverse Tokens AXS, SAND Plummet as Meta Reports $10B Loss

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Crypto Prices

Bitcoin (BTC)

See the latest price here

Ether (ETH)

See the latest price here

The following are the biggest movers in the CoinDesk 20 digital assets over the past 24 hours:

Biggest Gainers:

Biggest Losers:

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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ICYMI

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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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