The latest moves in crypto markets, in context Was this newsletter forwarded to you? Sign up here. |
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Good morning, and welcome to First Mover. I'm Bradley Keoun, here to take you through the latest in crypto markets, news and insights. (Lyllah Ledesma is off.) Price point: Bitcoin slides toward $20K, a price level not seen since 2020, as the Federal Reserve prepares to jack up interest rates. Bitcoin is headed toward Market Moves: Distress is spreading across the crypto industry, with pain felt from the crypto lender Celsius to the hedge fund Three Arrows. The celebrity investor Kevin O'Leary tells CoinDesk that, "We need someone to go to zero."
This newsletter was produced by Parikshit Mishra. Let us know what you think of First Mover by replying to this email. |
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Bitcoin (BTC) neared $20,000 in European hours Wednesday, sliding toward a crucial psychological level not seen since 2020, as distress spread across crypto and traditional markets. The largest cryptocurrency's price has now declined for nine straight days, a record losing streak in pricing data going back to the early 2010s. Turmoil in traditional markets pushed the European Central Bank held a rare, unscheduled meeting on Wednesday to discuss rising borrowing costs. (And markets quickly bounced on the news.) In a statement, the ECB promised to "apply flexibility" in its campaign to tighten monetary conditions, in light of the "current market situation." The Federal Reserve is scheduled to conclude its latest closed-door meeting on monetary policy with a statement at 2 p.m. ET on Wednesday, and bond traders now fully expect a 0.75 percentage point interest-rate hike, the biggest since the 1990s. (Officials are expected to publish an update of their closely tracked "Summary of Economic Predictions," known colloquially as the "dot plot.") Sentiment among investors remains bearish, CoinDesk's Shaurya Malwa reported. "Concerns around a sharp tightening of monetary policy are weighing on financial markets and are trickling down into cryptocurrencies through their influence on large institutional investors," Alex Kuptsikevich, an FxPro senior market analyst, said in an email to CoinDesk. "It is not surprising that bitcoin and ether are dragging the entire cryptocurrency market down in such an environment." Read More: 'Staked Ether' Becomes Focus of Crypto Stress, From Celsius to Three Arrows |
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The rapid tightening of monetary conditions – part of a push by central bankers to tamp down fast-rising inflation – has sucked liquidity out of crypto markets, and now cracks are appearing across the industry. Crypto lender Celsius paused all withdrawals earlier this week, citing "extreme market conditions," leading to questions about the firm's liquidity. The Wall Street Journal reported Wednesday that Celsius has hired lawyers specializing in business restructuring to help it navigate its thorny financial situation. Prominent crypto fund Three Arrows Capital faced at least $400 million in liquidations and scrambled to lower its collateral levels by selling key positions. The Block reported Wednesday that the Three Arrows Capital, popularly known as 3AC, has faced liquidations by crypto lending firms and is in the process of repaying lenders and counterparties. Coinbase and other big crypto firms are laying off thousands of employees, and analysts are on the hunt for fresh signs of distress. Those include scouring arcane market indicators like the "stETH discount," CoinDesk's Krisztian Sandor reported. Some firms are coming out proactively with self-assessments of good health (or innocence in the eyes of traders). Tether, the issuer of the popular dollar-linked stablecoin USDT, denied claims that its commercial paper portfolio is 85% backed by Chinese or Asian commercial paper, as reported by CoinDesk's Jamie Crawley. Tether described certain rumors spreading to this effect as "completely false and likely spread to induce further panic in order to generate additional profits from an already stressed market," in an announcement on Wednesday. 'Go to zero' According to FSInsights, an analysis firm, the combination of macro headwinds and over-leveraged yield strategies has resulted in the forced selling of cryptocurrencies in the last few days, wiping more than $200 billion in value from the digital asset market, Will Canny reported. The "takedown of terraUSD (UST) and Celsius is long-term constructive for the industry," wrote the head of digital asset strategy, Sean Farrell. "Such public displays of ignorant capital destruction are often overlooked in the traditional finance industry (or take a very long time to unwind)," the note said. Fortunately, he wrote, crypto markets have the benefit of "iterating and improving at a more rapid pace." The prevailing sense in the market, though, is that there's plenty of pain still to come. The celebrity investor Kevin O'Leary says he isn't ready to call a bottom in the crypto sector short of a major negative occurrence. "You don't get a bottom until you have an event," O'Leary told CoinDesk this week. "In the crypto world, we need someone to go to zero." |
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The SEC wants to hear from investors, like you. As part of Grayscale's filing to convert Grayscale Bitcoin Trust (Symbol: GBTC) to an ETF, the SEC provides a 240-day review period for anyone to submit comments for consideration.If you support the conversion, write to the SEC by clicking here - you have until the end of June to submit your thoughts. Your submission matters because: We can level the playing field. To date, the SEC has only permitted Bitcoin Futures ETFs, while rejecting "physically-backed" or Spot Bitcoin ETFs. The choice should be yours. If you've been waiting for the familiarity and protections of a Bitcoin ETF, we believe you should not be forced into a Futures-based product simply because it's the only one that exists. You can help take GBTC to the next level, conversion to an ETF. It's already the world's largest Bitcoin fund and regularly reports to the SEC on a voluntary basis as an SEC-reporting company. Learn more here.
This information should not be relied upon as investment advice or a recommendation regarding any security. Visit here for important disclosures.
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| The following are the biggest movers in the CoinDesk 20 digital assets over the past 24 hours: |
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Biggest Gainers Biggest Losers |
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Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges. |
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And check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9:00 a.m. U.S. Eastern time.
- Timothy Massad, research fellow, Kennedy School of Government at Harvard University
- Doug Schwenk, CEO, Digital Asset Research
- Ben Emons, managing director-global macro strategy, Medley Global Advisors
- French Montana, 3 time Grammy-nominated, multi-platinum recording artist and entrepreneur
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Consensus 2022, the must-attend crypto and blockchain experience of the year, is heading to Austin, Texas, from June 9-12. This is the only festival showcasing and celebrating all sides of the blockchain and crypto ecosystems and their wide-reaching effect on commerce, culture and communities. Register now for the lowest price. |
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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. |
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