First Mover Americas: Bitcoin Regains $42K Following Wednesday's Dip

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Bitcoin traded just above $42,000 in the European morning after Fed Chair Jerome Powell cooled hopes of an interest-rate cut in March yesterday. "The message from the Fed last night is that a March cut is not the base case, and they need to gain greater confidence that inflation will remain at these levels before moving," said Nick Chatters, a fixed income investment manager at Aegon Asset Management. "Having said that, confidence is building, and Chair Powell was open in communicating that a cut will come this year. No surprise in any of that." BTC dropped as low as $41,870 on Wednesday night, and while it has ticked slowly upward, it remains some way short of $43,000, where it started the week. The CoinDesk 20 Index, which measures the performance of the top digital assets, is down around 1.1% in the last 24 hours.

ARK Invest said the optimal allocation of crypto in one's portfolio is just under 20% in its annual Big Ideas report. "Over the last seven years, bitcoin has registered an annualized return far surpassing that of major asset classes, with an optimal allocation rising to 19.4% in 2023," the Cathie Wood-helmed firm wrote. "Our analysis suggests that allocating 19.4% to bitcoin in 2023 would have maximized a portfolio’s risk-adjusted returns." The optimum allocation was 0.5% in 2015 and 6.2% in 2022. Bitcoin's low five-year correlation of 0.27 with traditional assets underscores its diversification benefits, and even minimal allocations by institutional investors could notably influence its price, given the vast $250 trillion global investable asset base, ARK added.

Cryptocurrency lender Celsius will distribute $3 billion in crypto to its creditors as it emerges from bankruptcy. The crypto will be distributed via Coinbase and PayPal. As part of the deal, creditors will also get a stake in the newly formed Ionic Digital Inc. mining operation, which is expected to become a publicly traded company subject to regulatory approval. Celsius' bankruptcy process also saw it make a $4.7 billion settlement with U.S. authorities related to allegations of fraud by former CEO Alex Mashinsky. Mashinsky was released on a $40 million bond, and a court ordered his banking and real estate assets frozen. His trial is scheduled for September 2024.

Chart of The Day

• The chart shows the 24-hour change in cumulative volume delta (CVD) in futures and perpetual futures tied to the top 25 cryptocurrencies by market value.
• Except for BTC, TRX, ATOM and XMR, the CVD has been negative for most coins, indicating a net selling pressure.
• On Wednesday, Federal Reserve Chairman Jerome Powell pushed back against bets of a U.S. rate cut as soon as March, sending the dollar index to seven-week highs.
• Source: Velo Data

- Omkar Godbole

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