First Mover: Why the Fed Cares About Remote Working - and What It Means for Bitcoin

ALSO: $300M of bitcoin moves from Huobi to Binance

November 13, 2020 Sponsored By: By the CoinDesk Markets Team Edited by Bradley Keoun If you were forwarded this newsletter and would like to receive it, sign up here.  Bitcoin (BTC) -0.4% $15,892 Ether (ETH)  -0.1% $463 (Price data as of Nov. 13 @12:16 UTC) TODAY: Price Point: Bitcoin was lower after approaching $16.K during Asian trading hours.  Market Moves: The potential economic impact of a shift to widespread remote working is a matter of risk management: Authorities should be mapping out scenarios. The matter now appears to be on Federal Reserve Chair Jerome Powell's radar. Bitcoin Watch: With prices above $16K for first time in almost three years, bulls aim for next resistance point of $17,130, with $15,420 seen as support on the downside.  What's Hot: $300M of bitcoin moves from Huobi to Binance; European Central Bank Christine Lagarde says digital euro could come in 2-4 years; Ant's IPO versus China's digital currency. Price Point Bitcoin was lower after surging nearly $600 on Thursday to climb above $16,000 for the first time in almost three years.     "Investors should plan for volatility as well as price appreciation," the blockchain analysis firm Chainalysis wrote in a newsletter.    In traditional markets, European shares fluctuated and U.S. stock futures pointed toward a higher open as investors weighed prospects for a new stimulus package against record coronavirus cases. Gold strengthened 0.1% to $1,879 an ounce.  Market Moves Federal Reserve Jerome Powell has been sticking with his talking points lately. It goes something like this: What the economy needs right now is for U.S. lawmakers to pass a fiscal stimulus package, since ostensibly that money can go directly to people and businesses that need it most. (Instead of having to pump it into financial markets where it has to filter through the banking system and money markets before it can get to pocketbooks.)  The path of the economy depends on the path of the pandemic. (Investors seem to agree, based on yesterday's action in the U.S stock market.)  This year's economic contractionwas not due to excessive risk but simply the pandemic and related effects, such as shutdowns. (Even though analysts had been warning for years about ballooning federal budget deficits and a rapid and dangerous buildup in corporate debt.)   The banks are stronger than they were in the 2008 crisis. (This ignores the question of whether they would still be strong if the Fed hadn't pumped $3 trillion into the financial system this year, a roughly 75% increase in the total amount of money created since the early 20th century, while the U.S. government plied businesses and households with another $2 trillion of emergency aid. Plus the fact that Fed officials have promised to do whatever it takes to keep markets functioning and the economy recovering, encouraging households and businesses to flood banks with deposits despite historically low interest rates.) U.S. authorities shouldn't hasten to rush out a digital dollar, because it's important to go slowly and carefully to preserve the greenback's status as the global reserve currency. (Even though China's central bank is already in trials with a digital currency and European Central Bank President Christine Lagarde says she might be eager to get the process started because it will take two to four years until launch.)  They're all key themes that cryptocurrency traders are following, since a growing number of investors say extensive money printing could bolster bitcoin's use as a hedge against inflation.     But what was perhaps more interesting and new among Powell's comments at a virtual forum Thursday hosted by the ECB was his acknowledgement that life as we know it – and by extension the economy – is probably never going back to anything like it once was.    "You'll see more telework," Powell said at the virtual forum. "We're not going back to the same economy. We're recovering to a different economy."    It was more than just a talking point. It might have offered a glimpse into a key issue that Powell hasn't said much about. The coronavirus will have a lasting and scarring impact on the economy, but remote working might be another massive factor to consider for monetary policy.    The economy is in upheaval, and not just because people aren't eating out or going to movies or traveling for leisure, or because so many businesses and households would be ailing right now without all the emergency aid.    A secular transition to commuting-by-Internet might be taking place, perhaps one of the biggest labor-force transformations since the industrial revolution, which lured people to cities.   If workers genuinely enjoy the remote setup, and many do, and employers are genuinely seeing just how productive their employees can be working remotely, and it costs a lot of time and money to commute, and it's easier on many working parents to set up base at home, why would there ever be a return to the old office-based civilization?   What would this mean for the airlines? Commercial real estate? Oil companies? Automakers? Theme parks? Cities?   Governments and central banks are probably going to have to provide a lot of aid and stimulus to assure that the transition goes smoothly, that society holds together, that people can manage. And that widespread debt defaults don't overwhelm the banking system. Even many people who think bankers take advantage of their enshrined role in the economy will acknowledge that banks play an essential role in the existing financial infrastructure.    Dave Hendler, principal and founder at the bank-analysis firm Viola Risk Advisors, says one implication is that the hand of governments and central banks could be heavy in the economy, for a long time.    He said in a phone interview that he recently trekked from the New York suburbs into Manhattan for the first time since February for a wine-tasting event. While he was in town he visited his old barber. The barber, who has "one kid and another on the way," told Hendler he's down to one customer a day from a pre-pandemic level of about 20 a day.    Imagine if many of the office workers never really come back. It's an extreme but entirely plausible scenario.      "It's going to be a longer readjustment, and it's going to be more harsh," Hendler says. "There's going to have to be assistance for the transition to the new world."   Central bankers like Powell are only just now getting around to thinking about this, much less talking about it. As soon as more investors start to focus on it, the remote-working economy will probably demand a lot more attention — and possibly a lot more money.   - Bradley Keoun European Central Bank Christine Lagarde appears Thursday with Federal Reserve Chair Jerome Powell on a virtual forum. (CoinDesk screenshot of ECB video feed) SPONSORED BY GRAYSCALE® Grayscale Investments is the world's largest digital currency asset manager, with more than $9.1B in assets under management as of November 6, 2020. Grayscale offers the investment community industry-leading insights, expertise, and exposure to digital assets.  Insights - Grayscale produces bold, differentiated research and reports that shed light on digital currency investing. Whether you're a crypto newbie or an industry pro, Grayscale's growing resource library is invaluable. Expertise - Founded in 2013, few can claim to be involved in the industry as long as Grayscale. The firm understands what investors need to know about digital currencies and is dedicated to expanding interest in this rapidly expanding asset class. Exposure - Through its family of 10 investment products, Grayscale provides access and exposure to the digital currency asset class in the form of a security without the challenges of buying, storing, and safekeeping digital currencies directly.  Connect with Grayscale today EDITOR'S NOTE: CoinDesk, publisher of the First Mover, is a unit of Digital Currency Group, which also owns Grayscale, our sponsor. Sponsors have zero input into our editorial content.   Bitcoin Watch Bitcoin price chart showing the cryptocurrency's recent ascent above $16,000. (TradingView) Bitcoin appears to be holding above $16,000, and cryptocurrency traders are pondering the next move.    The big market debate now is if and when bitcoin returns to the record high price around $20,000 reached in December 2017.    George McDonaugh, managing director and co-founder of the publicly traded cryptocurrency investment firm KR1, wrote Friday in emailed comments that he doesn't expect bitcoin holders to sell until prices reach a new record, "given the comparatively small delta between $16,000 and $20,000."    Bitcoin has been known to surprise in the past with pullbacks that punish overly bullish bets. Alternative.me's Crypto Fear & Greed Index has pushed into the "extreme greed" zone, from a reading of "neutral" just last month.    "I expect we don't reach $20,000 in this current move," though it's likely to happen in 2021, McDonough wrote.    As noted last week by First Mover, bitcoin has spent so little time above $16,000 in its 11-year history that analysts eyeing price-chart patterns for clues have little to work with.      Matt Blom, head of sales and trading for the digital-asset financial firm Diginex, wrote Thursday that the next key level of price resistance looks to be at $17,130, with downside support at $15,420.     "New multi-year highs are fast becoming a dull headline," Blom wrote. "The bias to the market is still firmly bullish."   Bitcoin is now up an astounding 127% in 2020, versus 9.5% for the Standard & Poor's 500 Index of large U.S. stocks and 24% for gold.  - Bradley Keoun What's Hot Blockchain data show $300B of bitcoin moving to Binance from Huobi as Chinese government cracks down on cryptocurrency exchanges (CoinDesk)    PayPal removes waitlist for new crypto service, boosts weekly purchase limit to $20K (CoinDesk)    Ant's $35B IPO has roots in goals for digital yuan (CoinDesk)    Uniswap farming ends in 4 days, potentially freeing up $1.1B in ether (CoinTelegraph)    ECB's Lagarde has 'hunch' digital euro will launch in 2-4 years (CoinDesk)    Hut 8 Mining Revenue Drops 43% in Q3 mining revenue from Q4 level (CoinDesk)    Brent crude-oil futures now tradable on DeFi exchange Synthetix (CoinDesk)    Chainalysis wants to help governmental clients sell millions of dollars in forfeited bitcoin (CoinDesk)   Analogs The latest on the economy and traditional finance Former Chinese finance minister Lou Jiwei said Friday that U.S.-China trade tensions may not necessarily ease under a Biden administration (Reuters)   Brazilian President Bolsonaro handing out $10B a month to poor as public debt heads toward 100% of GDP from 76% last year (WSJ)    Writing off student debt is one way Biden can build Black wealth (Bloomberg)    The deadline to divest U.S. operations  for video sharing app TikTok has come and gone, leaving the social media giant in limbo (Nikkei Asian Review) Webinar: How to Value Ethereum   In the second episode of the live webinar series How to Value Ethereum, CoinDesk Research unpacks the many quirks of Total Value Locked – the most popular metric for measuring decentralized finance growth.   Sign up for How to Value Ethereum episode 2 on Nov. 17.   Tweet of the Day Goodbye, DAI and bitcoin SV. Hello, kyber and cosmos.   A swelling in volume in the crypto markets over the third quarter has changed the list of noteworthy digital assets beyond bitcoin and ether that matter most to traders and investors. That change is reflected in the CoinDesk 20.    In the latest revision, five assets were replaced by crypto assets that saw volume surges outpacing even the double-digit gains posted in market volume as a whole.    The new assets are algorand (ALGO), cosmos (ATOM), cardano (ADA), kyber (KNC) and omisego (OMG). On average, incumbent CoinDesk 20 asset volume increased by 22% from Q2 to Q3. However, these crypto assets' trusted market volume increased by much more.   These five new crypto assets replaced incumbent assets that are well-known to crypto investors. Read more about how they displaced incumbents bitcoin sv, dai, zcash, monero and dash on CoinDesk 20's latest update. Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.  ATTENTION: Scammers have been sending fraudulent emails with links to sites disguised to look like coindesk.com. If you are in doubt about a link, type https://www.coindesk.com directly into your browser; do not copy and paste. 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