First Mover Americas: Fifth Day of Declining Bitcoin Price Has Some Traders Looking Out Below
- Price Point: Bitcoin was lower for a fifth straight day, dashing hopes that the largest cryptocurrency might soar past $25K. Some traders are starting to worry about a move below $22K.
- Market Moves: A bullish trendline on bitcoin’s price chart has been breached on the downside, potentially a result of the Federal Reserve’s hawkish meeting minutes released Wednesday.
- Chart of The Day: A key indicator in the bitcoin options market known as “skew” shows renewed demand for puts, or contracts offering protection from price drops.
BTC was around $23,500 and has lost momentum from the $25,000 mark reached Monday. Traders are speculating that a move below $22,000 might suggest the rally has run its course for now.
ETH is moving in a similar direction, down 2% on the week and struggling to remain above the $1,800 mark after hitting highs of $2,000 earlier in the week.
Privacy token monero (XRM) was one of the only gainers in altcoins today, trading up 4% over the last 24 hours. Cosmos (ATOM) was trading up at 3%.
Coinbase suspicious trading
In traditional markets, stock futures edged up as investors awaited economic data including jobless claims, home-sales figures and other major earnings reports.
In the news, a new study found that insider trading was a bigger issue than previously thought at cryptocurrency exchange Coinbase, suggesting market regulators seeking to police trading may have more work ahead of them.
The paper found suspicious trading around 10% to 25% of new crypto listings and says the problem goes beyond the instances in a U.S. Department of Justice case brought in July.
According to JPMorgan analyst Kenneth Worthington, Coinbase is positioned to benefit from the Ethereum Merge as institutional and retail clients get value from staking ether.
In Latin America, Colombia is considering the introduction of a central bank digital currency (CBDC) to facilitate transactions and reduce tax evasion. As part of a tax reform program, the government of the South American country also plans to impose limits on cash transactions.
And, Solana’s biggest DeFi lender is leaning into “permissionless” loan markets. These “permissionless pools'' don't have any of the safeguards afforded to Solend’s whitelisted markets.
|Cosmos||ATOM||+3.3%||Smart Contract Platform|
|Ethereum||ETH||+0.3%||Smart Contract Platform|
|Loopring||LRC||−3.2%||Smart Contract Platform|
Bitcoin Loses Bullish Trendline as Fed Sees Restrictive Rates Needed for Some Time
By Omkar Godbole
Bitcoin lost a key price support after the minutes of the Federal Reserve's July meeting dashed hopes that looser monetary policy is set to return to the U.S. next year.
The leading cryptocurrency fell more than 2% on Wednesday, dropping below a bullish trendline drawn from July 15 and July 26 lows. The breakdown sparked concerns of a deeper sell-off on social media.
Fed minutes released late Wednesday showed policymakers discussed the need to continue raising interest rates to keep borrowing costs at levels that restrict U.S. economic growth for long enough to tame inflation. The cryptocurrency is sensitive to changes in Fed policy and has halved since the central bank kicked off its tightening cycle in March.
The push for continued rate hikes and restrictive policy contradicts recent market pricing, which had indicated expectations of interest-rate cuts in 2023 and lifted bitcoin to a two-month high of $25,203. The surprise may also inject volatility into markets.
"It seems reasonable that increasing and elevated rates are headwinds for bitcoin," said Lewis Harland, a researcher at Decentral Park Capital. "The Fed appears to keep consistent in their inflation north star and the cost seems like an economic contraction."
Traders of Fed fund futures no longer see the central bank switching to rate cuts next year, according to Mott Capital Management's Michael Kramer. Traders expect rates to peak around 3.7% by March and remain there until late 2023. Last month, the central bank raised the benchmark interest rate by 75 basis points (0.75 percentage point), lifting it to the 2.25%-2.5% range.
Read the full story here.
Chart of the Day
Bitcoin Skew Shows Renewed Demand for Puts
By Omkar Godbole
- The one-month put-call skew, which measures the cost of puts (bearish bets) relative to calls (bullish bets) expiring in four weeks, is rising again, indicating renewed demand for puts.
- Positive values indicate puts are pricier than calls, a sign of investors seeking downside protection.
- The one-month skew turned neutral early this month after rising as high as 35% in June.
- Digital Currency Group Leads $5M Fundraise for Blockchain Security Firm dWallet Labs: The investment will help build projects on Odsy Network, a new layer 1 blockchain focused on decentralized wallet access.
- Tether Swaps Accounting Firms, Says It Will Publish Monthly Attestation on Stablecoin Backing: BDO Italia will take over from MHA Cayman, Tether's previous accounting firm.
- South Korea's Money Laundering Watchdog Flags 16 Crypto Firms for Operating Without Registration: Crypto exchanges KuCoin and Poloniex are among the foreign firms accused of conducting "illegal business activities" without proper registration, and could face fines or imprisonment.
- Cash-Backed HUSD Stablecoin Loses Peg, Drops to $0.92: The stablecoin is trading as low as $0.89 against USDC on Curve Finance.
- 'Don't Say Terra' and Other Reflections From Korea's Crypto Extravaganza: A string of conferences in Seoul explored the future of DeFi, but the $40 billion blowup of a major Korean project was not on the agenda.