First Mover Americas: Bitcoin Drops to 3-Month Low as Crypto Traders Turn to Fed
- Price Point: Bitcoin slid to a three-month low of under $19,000, as traders prep for this week's Federal Reserve meeting. The Ethereum Merge hype has definitely faded.
- Market Moves: Goldman Sachs is keeping a close eye on rising inflation-linked bond yields, and Omkar Godbole writes that the trend could be worrying for bitcoin.
- Chart of the Day: Crypto analysts see bearish indicators in price charts, and they are mapping out how low bitcoin might trade.
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.
Bitcoin slid to a three-month low, leading a broad decline in digital-asset markets, as traders looked ahead to a likely stiff interest-rate hike at this week's Federal Reserve meeting. The two-day confab of top U.S. monetary policy makers will conclude on Wednesday.
While many crypto investors and analysts have argued that bitcoin is a hedge against inflation, the major force driving the largest cryptocurrency's price down lately are hawkish central bank actions to slow the pace of consumer-price rises.
"The macroeconomic environment still has a tight grip on the direction of financial assets, including bitcoin," analysts at bitcoin-focused investment firm Nydig wrote Friday.
At press time, bitcoin, (BTC) was changing hands at around $18,700, down 3.8% on the day. Ether (ETH) was trading at just above $1,300, well off last month's $2,000 price high, even though last week's Merge on the Ethereum blockchain – the network's landmark transition to a more energy-efficient "proof-of-stake" system – went smoothly.
"The sell-the-news reaction was strong," Paul McCaffery, an analyst at brokerage firm KBW, wrote in a report.
The CoinDesk Market Index was down 2.4% over the past 24 hours. CoinDesk's Omkar Godbole reported that crypto traders are putting on fresh bearish bets.
CoinDesk Market Index
|Terra Luna Classic||LUNA||+12.26%||Smart Contract Platform|
|Algorand||ALGO||+7.04%||Smart Contract Platform|
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.
Goldman's Bullish Stance on 'Real Bond Yield' Spells Bad News For Crypto
By Omkar Godbole
The U.S. inflation-indexed bond yield has surged by 100 basis points (one percentage point) since early August, causing renewed jitters in risky assets, including cryptocurrencies. And to the dismay of bitcoin bulls, the so-called real yield is likely to rise even further in the coming months.
On Friday, Goldman Sachs (GS) said that yields on 10-year U.S. Treasury inflation-protected securities (TIPS), which are adjusted periodically to compensate for increases in the consumer price index, could rise to 1.25% by the year end and eventually peak somewhere between 1.25% and 1.5%.
The real yield stood at 1.02% at press time, the highest since November 2018, according to data from charting platform TradingView.
Bitcoin has historically moved in the opposite direction to the real yield. The 90-day correlation coefficient between the two reached a record of minus 0.95 at the end of June. (A reading of minus 1 is considered a perfectly inverse relationship.)
Read the full story here.
Chart of The Day
New Lows for Bitcoin?
By Omkar Godbole
Bitcoin's reversal lower from confluence of the bearish trendline and key long-term moving averages suggests a resumption of the broader downtrend.
- "The bear market was confirmed by BTCUSD actively selling off after testing the 50-day moving average," the FXPro analyst team wrote in Monday's edition of its daily market update.
- "If we break $17,400 decisively, $14,800 is the next support level," Coinbase Institutional research analyst Brian Cubellis noted in a weekly markets update published Friday.
- Crypto Exchange FTX Not Authorized in UK, Financial Watchdog Warns: The Financial Conduct Authority says local FTX users are unlikely to recover funds tied to the platform should something go wrong because they aren't protected under compensation plans available to customers of authorized firms in the U.K.
- DeFi Trader Nets Over $500K by Using DEX GMX to Manipulate Avalanche Token: GMX developers capped open interest for Avalanche tokens to prevent a repeat of the manipulation.
- Australian Senator Proposes Crypto Bill Targeting China's Digital Yuan: The proposal lays out disclosure requirements for banks that could make China's central bank digital currency available for use in Australia, and seeks to set up licensing frameworks for stablecoin issuers.
- S. Korean Authorities Ask Interpol to Issue Red Notice for Terra Co-Founder Do Kwon, Financial Times Reports: Authorities in Singapore confirm that Kwon is no longer in the country, while he maintains that he’s not “on the run.”