First Mover Asia: Bitcoin Holds Steady on CPI Data. Are Investors Undecided?

Good morning. Here’s what’s happening:

Prices: Crypto Markets are undecided on CPI. Watch out for AI meme tokens.

Insights: Are Ordinals driving up the price of bitcoin? Probably not. But here's one important metric to watch.


+22.5 2.2%
+382.1 1.8%
+44.8 3.0%
S&P 500
−1.2 0.0%
+13.6 0.7%
Nikkei 225
+175.5 0.6%
BTC/ETH prices per CoinDesk Indices, as of 7 a.m. ET (11 a.m. UTC)

Bitcoin Ticks Up Slightly; Ether Outperforms

Bitcoin is opening the East Asia trading day relatively flat at 1.8%, or $22,149. Ether has begun the day outperforming bitcoin, trading at $1,550, up 3%.

A broad theme over the last year has been the correlation between the crypto market, the Consumer Price Index, and equities. Tuesday’s CPI report, which showed January’s CPI slowing at a lesser rate than expected, shook the market, but bitcoin kept with its upwards trajectory.

Speaking on CoinDesk TV, Martin Leinweber, a digital asset product strategist at MarketVector Indexes, said that the crypto market seems a little bit “undecided” right now.

“It seems that the market focuses more on the trends, and not at the level,” he said. “Maybe the fact that they’ve changed the methodology to calculate the CPI going forward is also a role.”

Leinweber said that this is leading to a shift in market focus from beta trading to looking for alpha in digital assets.

“There’s a renewed interest in thematic investing,” he said, pointing to the significant growth in tokens like optimism, layer-2s, and liquid staking derivatives like LIDO.

“DeFi could decouple when you compare it with bitcoin,” he said. “There’s a greater demand for infrastructure applications.”

DeFi needs stablecoins, and the headlines surrounding U.S. regulators attacking stablecoins are frightening investors.

“My hope we have some clarification going forwards because investors will have to have a reliable stablecoin because we need that in the ecosystem,” he said.

Looking forward, Leinweber says we need to watch out for meme coins. As the broader tech market is caught up in the GPT-3 fueled frenzy over Artificial Intelligence, a number of AI-related tokens have popped up.

Leinweber cautions that these are just this cycle’s meme coins. “There’s no AI in blockchain!” he said.

Biggest Gainers

Asset Ticker Returns DACS Sector
Cardano ADA +7.4% Smart Contract Platform
Polygon MATIC +5.6% Smart Contract Platform
Gala GALA +3.5% Entertainment

Biggest Losers

There are no losers in CoinDesk 20 today.


Bitcoin’s UTXOs Are Nearing a Record High; Here’s Why it Matters

Activity on the Bitcoin network is hitting a record high because the market has been receptive to the new collections minted via Ordinals, a type of non-fungible token (NFT) stored on Bitcoin.

There’s another metric that’s important, too: unspent transaction output (UTXO). And the UTXO count of bitcoin (BTC) is ticking upwards, set to challenge its all-time peak of 84.6 million from November 2022 – when there was a flurry of on-chain activity as traders tried to escape the wreckage of FTX's collapse.

UTXO refers to the individual units of bitcoin, called satoshis, or sats, that are locked in transactions on the blockchain.

When a transaction occurs, bitcoins are sent from one address to another and the remaining amount is returned to the sender in the form of a UTXO.

These UTXOs can then be used as inputs for future transactions, essentially proving that the sender has the necessary funds to make the payment.

Now, this spike in UTXO could be explained by an increase in small, retail, interactions with bitcoin. It also shows that more individuals – as opposed to whales or large investors – are currently active on chain.

"It seems like the overall trading size of the bitcoins has decreased and investors are carefully watching how the market direction would turn out with the UTXO value bands with less than 0.01 BTC are the main reason for the significant increase in the UTXO counts,“ CryptoQuant contributing analyst Dan Lim wrote in a note to CoinDesk. “It's good progress as there are market participants tapping into the market."

UTXOs have steadily appreciated over the last two years. They experienced a brief dip during the coldest depths of the 2022 FTX-induced, end-of-year crypto winter but resumed their climb as bitcoin rallied through January.

UTXOs also tell us that despite a new, large cohort of people interacting with bitcoin thanks to Ordinals, there’s also a large group of whales HODLing. As CoinDesk previously reported, the age of UTXOs older than five years has increased by 17% in the past six months.

“Overall, the growth of the Bitcoin UTXO counts is a good thing because more exposure of bitcoins can create mass adoption in the long run," Lim said.

But the question is, what does this mean for the price of bitcoin? On one hand, a collision between a large group of stalwart HODLers and a new, growing group of retail users is, in, theory, bullish for the price of bitcoin. Others, however, aren’t so sure.

Tony Ling, co-founder of data portal NFTGo, and a partner at Bizantine Capital doesn’t think the demand from Ordinals is high enough yet to drive up the price of bitcoin although its causing an up-tick in activity on-chain.

“There’s no mature marketplace on the Bitcoin network, so I have doubts about the real conversion and purchase demand,” he told CoinDesk in a note.

According to Ling, bitcoin's recent price rise has been fueled by an influx of USDT into bitcoin, not by increased pressure on the Bitcoin network due to ordinals.

Ling is still bullish about the price of bitcoin and expects it to reach around $30,000-$35,000 – but any attempt at testing all-time highs is not going to be until the second half of 2024.

Important events.

12:30 p.m. HKT/SGT(4:30 UTC) United States Retail Sales (MoM/Jan)

European Blockchain Convention 2023 (Barcelona)

Africa Tech Summit 2023 (Nairobi, Kenya)

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

Bitcoin Outlook After CPI Data; Paxos Disagrees With SEC That BUSD Is a Security

Stablecoin issuer Paxos acknowledged that it had received a Wells Notice from the U.S. Securities and Exchange Commission, indicating a possible enforcement action based on the charge that its Binance USD constitutes an unregistered security. Bain Capital Crypto Partner and Head of Regulatory and Policy TuongVy Le weighed in. Plus, MarketVector Indexes Digital Asset Product Strategist Martin Leinweber shared his crypto markets analysis after CPI for January rose 0.5% versus 0.1% a month earlier. And, the Moskowitz Law Firm Managing Partner Adam Moskowitz reacted to the legal battle brewing for control over private FTX cases.


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