First Mover: Bitcoin’s Stimulus-Led Rise Fades as Stocks Drop, Dollar Gains
 March 8, 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) -0.3% $50,540 Ether (ETH) +2.9% $1,724 (Price data as of Mar. 8 @12:00 UTC) Good morning. Here's what we're writing about:
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MARKET MOVES by OMKAR GODBOLE Bitcoin's Stimulus-Led Rise Fades as Stocks Drop, Dollar Gains Bitcoin has erased Sunday's gains as traditional markets struggle to cheer progress on U.S. fiscal stimulus efforts.
The cryptocurrency is changing hands just over $50,150 at press time, representing a 1.55% drop on the day, according to CoinDesk 20 data. Prices had jumped from roughly $49,000 to $51,800 on Sunday as the U.S. Senate approved President Joe Biden's $1.9 trillion stimulus plan. The bill now heads back to the House for clearance.
Traditional markets gave mixed reactions early today, with the U.S. dollar falling against major fiat currencies and Asian stocks and U.S. stock futures initially charting moderate gains. However, with the U.S. 10-year bond yield remaining elevated near 12-month highs reached Friday, the dollar soon regained ground, pushing the Asian equities and bitcoin (BTC, -1.08%) lower.
The 10-year yield is currently trading just shy of Friday's high of 1.62%. S&P 500 futures are now nursing losses and futures tied to the tech-heavy Nasdaq index are down nearly 2%.
Movement on stimulus was expected to put upward pressure on yields, and cap progress for risk assets. Hence, bitcoin's failure to establish a foothold near $52,000 doesn't come as a surprise.
 Bitcoin's daily chart (Source: TradingView) The cryptocurrency has faced rejection near $52,000 three times this month, making it a level to beat for the bulls. The breakout, however, may remain elusive if yields continue to rise, diluting bitcoin's appeal as an inflation hedge.
Additionally, developments in the Chinese stock market could be a key driver of bitcoin's price action, trader and analyst Alex Kruger told CoinDesk over Telegram.
The Shanghai Composite Index fell by over 2% today, while the FTSE China A50 index declined by nearly 4%. The former is down 14% from its February peak, while the S&P 500 is down less than 5% from the record high reached in mid-February.
Although the exact reason for the big drop in Chinese stocks is not known, it could be a harbinger of things to come amid rising fears of an early unwinding of stimulus by the Federal Reserve. According to Gary Biddle, professor of financial accounting at the University of Melbourne, the stock market is collapsing after a last-gasp bull run.
"With monetary easing set to end, it's a game of chicken as investors see how close they can come to timing the inevitable downturn," Biddle said in an article for South China Morning Post.
It remains to be seen if the Chinese stock market ends up dragging its global peers and bitcoin lower. The cryptocurrency's options market data shows some investors are beginning to position for a deeper drawdown. "Puts are being bought today," Swiss-based data analytics platform Laevitas told CoinDesk.
 Bitcon's options market activity (Source: Laevitas)
So far today, more than 300 daily expiry (bearish) put option contracts have been bought at $50,000 and $48,000 strikes on Deribit, the world's largest crypto options exchange by trading volume and open positions.
According to data provided by Skew, the one-week put-call skew, which measures the value of puts relative to calls, is hovering above zero, indicating increased demand for short-term puts.
While the one-, three- and six-month skews are still negative, reflecting a bullish bias, they are considerably higher than earlier this year.
--Omkar Godbole
Read the original story here: Bitcoin's Stimulus-Led Rise Fades as Stocks Drop, Dollar Gains
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OTHER MARKET NEWS Soaring Prices for Enjin, FLOW and Rarible Reveal Risks of 'NFT Marketplace' Tokens Some cryptocurrency traders, rather than buying NFTs directly, are buying digital tokens affiliated with the marketplaces that have popped up for trading NFTs. This way traders can bet on the NFT industry's growth without having to go all-in on some sky-high priced digital artwork or trading card.
Investors think these tokens "can serve, in a way, as index bets on the growth of the NFT marketplaces they power," said Alex Gedevani, research analyst at Delphi Digital.
NFT frenzy
According to Messari, a data provider for cryptocurrency markets, the 10 biggest digital tokens that are associated with NFT platforms have returned in a year-to-date price range from about 60% to 900%.
The FLOW token, of the Dapper Labs-backed Flow blockchain, which powers the digital collectibles platform NBA Top Shot, is up 79% just in the past seven days to a market capitalization of $1.1 billion, according to CoinGecko. (Last week, some 10,631 packs of basketball videos hashed to the Flow blockchain sold for a record $1.05 million.)
And in a sign of just how frenzied the trading action has become, the ENJ token, from a startup company called Enjin, shot up 50% to surpass a market valuation of $1 billion. CoinDesk reported that Enjin planned to roll out two new product offerings focused on NFTs.
The outsize price gains offer a reminder of just how speculative cryptocurrency markets have historically been, with fast profits possible alongside steep risks.
Even some NFT industry executives are agog at how rapidly the token prices are zooming. For instance, the WAX token, WAXP, has tripled this year to a market value of $175 million.
Rationalizing the pump
Most NFTs are digital tokens created atop the Ethereum blockchain network under special-purpose standards known as ERC-721 or ERC-1155. Because they're unique, their value is more subjective and their worth is in the eye of the beholder.
The platform tokens, by contrast, use the more common ERC-20 or other similar token standards on non-Ethereum blockchains. They're more widely distributed and traded, so their fair value is determined by the market. Many of them are listed on exchanges so the pricing is more transparent.
Both Rarible's RARI and WAX's WAX tokens are governance tokens for the respective NFT trading platforms, where token holders can earn rewards from trading fees while voting for the platform's upgrades. Enjin's ENJ, on the other hand, is a utility token of Enjin, which requires ENJ as collateral to issue new fungible or non-fungible items on the gaming platform.
Investing in NFTs "requires an investor to be precisely right – similar to betting that a bitcoin payment company will succeed – rather than just directionally correct like betting bitcoin will succeed," said Mason Nystrom, research analyst at Messari
Risks rise as prices skyrocket
With the skyrocketing appreciation of many of these tokens, the pressure of any near-term sell-off is also high.
Flow, for example, has a very low circulating supply, with many investors having bought the token at a very low price.
"We'll likely see some short-term sell-off once tokens start vesting especially considering both institutional and retail investors are up many multiples since they had really low initial purchase prices – $0.1 per Flow – in some instances like the CoinList Auction," Nystrom said. --Muyao Shen Read the full story here: Soaring Prices for Enjin, FLOW and Rarible Reveal Risks of 'NFT Marketplace' Tokens
BIGGEST MOVERS These are the biggest movers in the CoinDesk 20 over the past 24 hours:
Gainers: Losers:
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.
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ICYMI In case you missed it, here is yesterday's episode of First Mover: Markets React to Strong Jobs Report, Fidelity With Institutional Investor News, Stablecoins vs. CBDCs and More The latest crypto market moves, Fidelity Digital Assets Research Director Ria Bhutoria anticipating more institutional investors to enter crypto, XBTO's Philippe Bekhazi on the future of stablecoins and Valour's Diana Biggs discusses crypto adoption and the regulatory environment in Europe.
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