First Mover Asia: Bitcoin Holds Firm Below $30K as Sam Bankman-Fried Returns to Incarceration
First Mover Asia: Bitcoin Demonstrates Resistance to CPI Effects
First Mover Asia: Bitcoin Tempts $30K as Investors Eagerly Await ETF Approval
Good morning. Here’s what’s happening:
Prices: Bitcoin regained its perch above $30K, but its rally stalled; ether hovers near $2,100.
Insights: Longer-term narratives, such as bitcoin's recent store-of-value story matter but price depends on traders' shorter-range, often fickle sentiments.
Prices
|
$30,341
+959.4 ▲ 3.3%
|
$2,100
+25.0 ▲ 1.2%
|
1,323
+30.4 ▲ 2.3%
|
|
S&P 500
4,154.87
+3.6 ▲ 0.1%
|
Gold
$2,018
+23.7 ▲ 1.2%
|
Nikkei 225
28,658.83
+144.1 ▲ 0.5%
|
BTC/ETH prices per Coincryptous as of 7 a.m. ET (11 a.m. UTC)
Bitcoin Rises Over $30K and Then Pauses
On Tuesday, the crypto markets showed a promising start as Bitcoin regained its position above the crucial psychological level of $30,000.
By midday, the Bitcoin rally came to a halt around the $30,300 mark, resulting in a modest 3.3% increase in the past 24 hours for the leading cryptocurrency. On Monday, Bitcoin had dropped to approximately $29,100 before making a recovery, as investors renewed their interest in assets that retain value despite diminishing concerns regarding the banking sector.
During an interview on CoinDesk TV's "First Mover" program, Dessislava Aubert, a senior research analyst at Kaiko, characterized the current rally as "macro driven" and stated that its sustainability would be contingent upon liquidity
The rally "started with the Fed (U.S. Federal Reserve) providing emergency liquidity to banks in the United States," Aubert said. "So definitely, liquidity is playing a huge role."
She added: "We have seen that markets are expecting great cuts in the second half of the year. So there is still a lot of uncertainty around whether this will be the case or not. Ultimately, it will depend on how U.S. monetary policy turns out."
Ether has surged above the $2,100 mark for the second time in just three days, only to dip below it briefly before bouncing back up again. Currently trading at around $2,100, the second largest cryptocurrency by market capitalization has seen a modest 1.5% increase. Despite the recent Ethereum Shanghai upgrade, a sell-off has not yet materialized.
Other significant cryptocurrencies demonstrated strong growth, with Internet Computer's ICP token, a blockchain-based platform for smart contracts, increasing by 15% to reach approximately $6.80. XRP, the native cryptocurrency of XRP ledger, a blockchain-based platform focused on payments, rose over 3%. The CoinDesk Market Index, which evaluates the performance of the overall cryptocurrency market, recently experienced a 2.7% increase and is currently in a significant uptrend phase on a scale of one to five.
Equity indexes remained mostly stagnant throughout the day, with the Dow Jones Industrial Average (DJIA), tech-heavy Nasdaq Composite, and S&P 500 hovering around the same levels as the previous day's closing. While gold experienced a slight uptick to reach $2,017, it was still lower than its recent record highs last week when assets with strong value were in high demand. The yield on 2- and 10-year Treasurys showed a slight increase, although the surge witnessed last week appears to have reached a plateau.
Anthony Georgiades, co-founder of Pastel Network, a decentralized blockchain for non-fungible tokens (NFT), cryptos and Web3 technology, explained in an email to CoinDesk that bitcoin's drop below the $30,000 mark can be attributed to a combination of factors, including the Federal Reserve's focus on inflation and the possibility of further hawkish interest rate hikes. Additionally, he pointed out that there has been a loss of trust in the US dollar and banking system among the public.
"People...are seeking a decentralized safe haven asset that is an inflation hedge," he said.
He added: "There are also macroeconomic conditions to consider. With an easing CPI and recessionary signals, the market seems to be pricing in potentially dovish Fed policies, which could lead to a risk-on craze. Bitcoin has found itself in somewhat of a paradoxical environment, and there may be price fluctuation to weather until the Fed’s short and medium-term monetary policies become clearer."
| Asset | Ticker | Returns | DACS Sector |
|---|---|---|---|
| Chainlink | LINK | +5.3% | Computing |
| Gala | GALA | +4.4% | Entertainment |
| Terra | LUNA | +3.5% | Smart Contract Platform |
| Asset | Ticker | Returns | DACS Sector |
|---|---|---|---|
| Loopring | LRC | −0.6% | Smart Contract Platform |
| Decentraland | MANA | −0.5% | Entertainment |
Insights
Bitcoin’s 'Store-of-Value' Narrative Is Real but Not a Price Mover
Markets are inherently turbulent and disorderly, prompting us humans to seek out structure and logic. This often entails attempting to rationalize the reasons behind upward or downward trends in prices, or identifying the catalysts behind sudden and significant shifts.
Frequently, a clear-cut explanation exists - perhaps an unforeseen corporate maneuver or a pleasant earnings surprise. However, on occasion, the cause may not be readily apparent, such as shifts in fund allocations, changes in the user demographic, or consistent product advancements.
"Noelle Acheson, who previously served as the head of research at both CoinDesk and Genesis Trading, has written an article excerpted from her newsletter, "Crypto Is Macro Now." The newsletter explores the intersection between the evolving crypto and macro landscapes. It should be noted that the opinions expressed in the article are solely those of Acheson and should not be construed as investment advice."
The factors influencing shifts in sentiment with bitcoin (BTC) are particularly challenging to identify because it lacks earnings, corporate actions, and regulatory threats that may affect other cryptocurrencies. Additionally, there are multiple and diverse narratives surrounding bitcoin, and there is no consensus on what it actually is, let alone what drives its price.
Our desire to find meaning amidst chaos often leads us to embrace a narrative that provides a sense of logic, especially if it aligns with our interests and highlights a relevant concept at the time.
Store of value
Lately, there has been a prevalent usage of the term "store of value," which can have varying interpretations depending on the individual. However, in general, it denotes an asset that maintains its value compared to a diverse range of other assets for a prolonged duration.
Despite its short-term price volatility and occasional bear markets, bitcoin is still considered a viable store of value due to its unique characteristic of being the only asset traded on highly liquid exchanges with a programmatic and verifiable hard cap. In contrast, other hard assets such as gold, diamonds, and real estate lack a transparent and predetermined supply cap, making it difficult to determine how much of these assets currently exist.
Furthermore, the price of other "hard assets" can affect their potential supply. For example, if the price of gold were to increase from $2,000 to $20,000 per ounce, new extraction methods would become economically feasible, increasing the theoretical supply limit. In contrast, Bitcoin is the only asset traded on liquid exchanges that is impervious to the impact of price fluctuations on its supply. This makes it the hardest of all hard assets.
Moreover, the quantity of its predominant currency, the U.S. dollar, has been rising steadily for decades and at an exceptional pace in recent times. It is probable that we are on the verge of another round of monetary easing, which involves reducing interest rates and encouraging credit usage to counteract declining economic growth and consumption.
If the supply of USD rises beyond the capacity of economic growth to absorb it, then, assuming all other factors remain constant, its value compared to other assets will decrease. As a consequence, if the denominator's value decreases, then the ratio's value will increase based on fundamental arithmetic principles. Bitcoin functions as a store of value and a safeguard against currency debasement.
Source Coindesk
