First Mover Americas: Bitcoin Busts Past $20K on Hopes of Fed Pivot

  • Price Point: Bitcoin rises above $20,000, as risky assets climb on the hopes that central banks will pivot away from their money-tightening policies.
  • Market Moves: Bitcoin's bullish momentum is building.
  • Chart of the Day: Financial stress remains contained, weakening the case for the so-called Fed pivot.

This article originally appeared in First Mover, CoinDesk’s daily newsletter putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.

Price Point

Bitcoin (BTC) rose 5% over the last 24 hours, reaching an important psychological level of $20,000 as global markets climbed, lifting U.S. index futures and European stocks. The move comes as investors were eyeing whether central banks will have to slow their pace of monetary tightening.

Ethereum (ETH) was up by 4% on day to $1,350.

"Investors know that the stronger the U.S. dollar, the more sell pressure on BTC," said Charles Storry, head of growth at Phuture, a crypto index platform.

“Many investors feel the Fed could pivot and drop interest rates as the Bank of England just did. This would trigger a large buying opportunity for BTC, which is extremely bullish,” Storry said.

“Smart money is beginning to build positions already. Hence the recent price bump." he added.

DeFi (decentralized-finance)tokens also rallied on Tuesday, with Chainlink’s LINK up 7.5% and the token for liquid staking protocol Lido DAO (LDO) up 9.6%.

Other winners included the tokens of Quant Network, up 8%, Polygon (MATIC), up 7% and Cosmos (ATOM), up 7.4%.

In the news, Grayscale Investments, which offers the world’s biggest bitcoin trust, is bringing a key administrative role for all of its products in-house through a new broker-dealer unit.

Grayscale Securities, the new broker-deal division, will handle selling shares of the company’s crypto trust products, taking over a function previously provided by fellow Digital Currency Group subsidiary Genesis Global Trading. (Digital Currency Group also owns CoinDesk.)

And Web3 data startup Golden has raised $40 million in a Series B funding round that was led by the crypto arm of noted venture-capital firm Andreessen Horowitz, according to a post on the company’s website.

CoinDesk Market Index

Biggest Gainers

Asset Ticker Returns DACS Sector
Maker MKR +5.64% DeFi
Terra LUNA +5.54% Smart Contract Platform
Polymath POLY +5.26% DeFi

Biggest Losers

Asset Ticker Returns DACS Sector
Rally RLY -3.28% Culture & Entertainment
COTI COTI -3.08% Currency
BarnBridge BOND -2.96% DeFi

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 Market Index (CMI) is a broad-based index designed to measure the market capitalization weighted performance of the digital asset market subject to minimum trading and exchange eligibility requirements.

Market Moves

Bitcoin Gains Momentum on Fed Pivot Narrative, But Some Banks Anticipate Dollar Rebound

By Omkar Godbole

Bitcoin continues to build bullish momentum, hoping that financial stability risks and signs of economic slowdown will force the Federal Reserve to pivot away from aggressive liquidity withdrawal measures. However, some observers are unconvinced the Fed will abandon or dramatically slow the so-called liquidity tightening anytime soon and expect renewed dollar strength.

The top cryptocurrency by market value reached a high of $20,150 soon before press time, registering a 2% gain for the day. The dollar index fell to a nine-day low of 11, having hit a two-decade high of 114.77 on Sept. 28.

Bitcoin buyers stepped in on Monday after the U.S. Institute of Supply Management said its manufacturing purchasing managers’ index dropped to 50.9 in September, the lowest reading since May 2020, from 52.8 in August. Notably, the index's new orders and employment measures contracted, strengthening the case for the Fed pivot.

"It’s been a case of ‘bad news is good news’ for equities, with the market treating the downside surprise to the ISM index as increasing the chances of an earlier Fed pause, seen as positive for risk assets," the Bank of New Zealand's research team wrote in clients early Tuesday. Bitcoin tends to move more or less in line with equities and has halved this year in terms of market value, with the Fed raising rates by 300 basis points.

Expectations that the Fed and other major central banks would slow tightening gripped the market last week after the Bank of England announced a bond purchase program, popularly known as quantitative easing, to ensure the orderly functioning of the government bond market.

Read the full story here.

Chart of the Day

Systemic Financial Stress Remains Contained as Market Anticipates Fed Pivot

By Omkar Godbole

The FSI measures disruptions in the normal functioning of financial markets. (U.S. Office of Financial Research)

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