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Good morning, and welcome to First Mover. I'm Lyllah Ledesma here to take you through the latest in crypto markets, news and insights. In today's newsletter: - Price Point: The correlation between crypto and stock markets is strong, as global markets take a hit amid heightening geopolitical tensions, bitcoin and ether also trade down.
- Market Moves: ETH and BTC trading volumes converge for the first time. Will there be a change in market dominance?
- Chart of The Day: U.S. yield curve is its flattest since 2000.
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Bitcoin (BTC) and ether (ETH) were both down on Tuesday as the rest of global markets fell ahead of fears that the U.S. House of Representatives Speaker Nancy Pelosi's planned visit to Taiwan could heighten tensions between Beijing and Washington. The prospect of escalating geopolitical tensions led to a fresh risk-off sentiment among investors, and cryptocurrencies are seen as risky assets. Amid the news, in China, the benchmark Shanghai Composite dropped 2.3%, while Hong Kong's Hang Seng Index fell 2.4%. BTC was down by 1% over the last 24 hours and ETH dipped by 5%. "The larger dip in ether is just ETH taking a profit trade from investors after a 50% rally in July," said Pablo Jodar, financial products manager at Storm Partners, a systems provider for the cryptocurrency space in Europe. In July, ETH rallied by 56% and BTC was up by 16%, according to data from TradingView. |
Ether returns in July. (TradingView) |
Bitcoin returns in July. (TradingView) |
"It's important to recall the difference between the two tokens' rally last month," said Jodar. "It's normal to see a bigger dip in ETH now." The correlation versus stock markets remains strong for cryptocurrencies right now, which signals that the Hang Seng index dipping Tuesday hurts the momentum, explained Jodar. "The support for ETH now sits at around $1,500," Jodar said. "If ETH manages to keep that level, it will be a positive signal for the market and the bullish trend could continue to $1,700." The only tokens trading in the green Tuesday were Crypto.com's Cronos (CRO) and Chilliz (CHZ), which is a digital currency for sports and entertainment, powering the platform Socios.com. They were up by 7% and 13%. In the news, Coinbase Prime has added Ethereum to its expanding list of staking options for U.S. domestic institutional clients, according to a blog post Monday. According to a report from CoinShares, crypto funds saw a fifth consecutive week of inflows, with net inflows of $81 million in the seven days ended July 29. July's $474 million of inflows were the largest monthly amount this year and reversed June's outflows of $481 million. User activity on lending protocol Aave rose to a 2022 high ahead of the launch of its yield-generating stablecoin, GHO. Read more about this here. |
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ETH and BTC Trading Volumes Converge For First Time For the first time this year, ether's market share of trading volume achieved 50% parity with bitcoin's, according to data provided by Kaiko Research. It was previously around 45% to 50%. |
BTC vs. ETH Volume. (Kaiko) |
"This could be because of FOMO from investors of ETH 2.0 or because there is already a change in tendency," said Jodar. "In the next bull market maybe we will see a change in market dominance." |
Chart of The Day by Omkar Godbole: U.S. Yield Curve Flattest Since 2000 |
- The U.S. 10/2 yield spread, measuring the difference between yields on 10- and two-year Treasury notes, is now at its most inverted since September 2000.
- The relentless flattening indicates that even as the Fed raises rates and puts upward pressure on the two-year yield, market participants are buying the 10-year note, pushing its yield lower.
- It reflects investor belief that the Fed's tightening cycle would be over soon and rates would fall again, perhaps to support economic growth. Bond prices and yields move in the opposite direction.
- The flattening, therefore, could be considered bullish for risk assets, including bitcoin. It's the classic case of bad news being good news for markets, especially since risk assets seem to have priced tightening since November.
- The 10-year note often attracts haven demand and could do so if tensions between the U.S. and China escalate over the U.S. House of Representatives Speaker Nanci Pelosi's visit to Taiwan – a self-governed Island claimed by Beijing. In that case, risk assets will likely dip alongside the continued flattening of the yield curve.
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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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- Daniel Muvdi, head of markets, Quantfury
- Keith Grossman, president, TIME
- Alex Zinder, global head, Ledger Enterprises
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Today's newsletter was edited and produced by Bradley Keoun. |
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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