First Mover: Markets Shake This Tethered Coil and Get Squared Away
 February 24, 2021  Everything you need to make sense of the crypto markets and beyond Sponsored By:  By the CoinDesk Markets Team Edited by Lawrence Lewitinn If you were forwarded this newsletter and would like to receive it, sign up here. Bitcoin (BTC) +3.9% $50,725 Ether (ETH) +7.1% $1,690 (Price data as of Feb. 24 @12:57 UTC) Good morning. Here's what we're writing about:
Check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Lawrence Lewitinn and Emily Parker, at 9 a.m. U.S. Eastern time. Today the show will feature guests:
MARKET MOVES Tether (USDT) rescued the crypto market Tuesday, albeit not the way its detractors have accused it in the past.
Bitcoin staved off further losses on news that the stablecoin's issuer and the New York Attorney General finally came to a settlement. Tuesday morning, bitcoin was struggling to keep itself in the low $46,000 range. From its Sunday highs, it lost 20% over the course of two days, its worst 48-hour performance since March 2020.
That changed when the NYAG announced the agreement. Immediately after, prices on the world's oldest cryptocurrency shot up above $49,000.  Bitcoin prices, Feb. 23 to Feb. 24, 2021. (CoinDesk) So why the fuss over a stablecoin?
Tether is a crucial part of the crypto markets. Nearly 45% of bitcoin traded on exchanges is done against USDT, according to data site CryptoCompare. For many in Asia, tether is the on-ramp to get into crypto trading. Thus having more certainty about it would mean more certainty about the price of bitcoin and other cryptocurrencies so heavily dependent on tether for liquidity.
As part of the deal, Tether agreed to quarterly disclosures of its cash and equivalents in reserve over the next two years. Critics often cite Tether's opacity as a reason to worry about it. Indeed, in a statement following the settlement, NYAG Letitia James said, "Tether's claims that its virtual currency was fully backed by U.S. dollars at all times was a lie."
The Tether settlement didn't keep prices up for long. Near the end of the U.S. equity markets close, it was again testing support in the $45,000 range at around 20:00 UTC (3:00 p.m. ET). However, it once against rallied on another bit of news.
Square (NYSE: SQ) released its 10-K showing that its bitcoin revenue was up an astonishing amount and it also bought $170 million worth of BTC in February. At $4.57 billion, Square's bitcoin revenue is a 785% jump from $516 million the year before and represents 48% of the company's entire revenue.
Bitcoin has been trading between $50,000 and $51,000 since 2:00 UTC Wednesday (9:00 p.m. Tuesday ET).
Meanwhile, ether has been trading in tandem with bitcoin. For the past several hours, the world's second largest cryptocurrency by market cap has stayed in a range between $1,600 and $1,700, a relief to those who saw it change hands as low as $1,361 the day before. Yet not all has been rosy for ether.  Ether prices, Feb. 23 to Feb. 24, 2021. (CoinDesk) Some $115 million in loans were liquidated on decentralized finance (DeFi) platforms Tuesday. That happened before the subsequent rally, when prices were hovering around the $1,400 mark. Most of those liquidations — $86 million — were on Compound Finance's platform alone.
What's more, the value of assets locked in DeFi is down slightly to $38.9 billion, according to DeFi Pulse. On Monday, it was as high as $42.84 billion. Yet it's important to keep it in perspective: A the start of the year, "only" $15.5 billion in value was locked and it crossed the $1 billion threshold only a few months before that.
Traders pay attention to DeFi because so much of it is built on Ethereum.
--Lawrence Lewitinn
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OMKAR GODBOLE Bitcoin's euphoric derivatives market has cooled, weakening the case for an extended price pullback.
The perpetual futures funding rate, or the average cost of holding long positions on major exchanges, has declined to 0.02%, having surged to a multi-month high of 0.13% earlier this month.  Bitcoin perpetual futuers funding rates prices (Source: Glassnode)
According to Arcane Research, the market seems healthier with funding rates back to normal levels. Patrick Heusser, head of trading at Crypto Finance AG, foresees price consolidation. "The decline in the funding rate will tame the selling pressure," Patrick said. "I am looking for consolidation between $45,000 to $50,000."
--Omkar Godbole
See Omkar Godbole's report today: Bitcoin Retakes $50K as Powell Eases Market Jitters, Bond Yields Drop
BIGGEST MOVERS These are the biggest movers in the CoinDesk 20 over the past 24 hours:
Gainers: None of the CoinDesk 20 constituent digital assets were down relative to where they were 24 hours ago.
The CoinDesk 20 filters from the larger universe of thousands of cryptocurrencies and digital assets to define a core group of 20. These assets constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges.
BOLO Be on the lookout for these events today:
21:00 UTC (4:00 p.m. ET): Chipmaker NVDIA (NASDAQ: NVDA) reports Q4 earnings. What to look for: Revenues are expected to come in at $4.8 billion and EPS is forecasted to be $2.81. Its chips have been in short supply thanks as surging crypto prices make mining more lucrative.
FIRST MOVER TV SHOW HIGHTLIGHTS  Paxos Plans to File for a Clearing Firm License CEO Charles Cascarilla said the crypto firm, which already settles equities trades, hopes to apply for a clearing firm license soon.
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