First Mover: Stimulus Bet Wins Even as Bitcoin Slips Below $18K

PLUS: MassMutual buys $100M in bitcoin along with $5M NYDIG stake

December 11, 2020 Everything you need to make sense of the crypto markets and beyond Sponsored By: By the CoinDesk Markets Team Edited by Bradley Keoun If you were forwarded this newsletter and would like to receive it, sign up here.  Bitcoin (BTC) -2.8% $17,748 Ether (ETH)  -2.9% $542 (Price data as of Dec. 11 @12:24 UTC) TODAY: Price Point: Bitcoin prices slip below $19K as momentum fades.   Market Moves: MassMutual's push into bitcoin shows increasing institutional adoption – of the narrative that the cryptocurrency can work as a hedge against central-bank money printing. The ECB's expanded asset-purchasing binge offers a reminder that the trend is global.  Bitcoin Watch: Price charts show relative strength index dipping below 50, a bearish turn, CoinDesk's Omkar Godbole writes.  What's Hot: CFTC's Tarbert plans to step down, Ethereum developer community is nearly 6x the size of Bitcoin's, charting site TradingView gets boost from bitcoin interest, U.S. jobless claims rise. Price Point Bitcoin was lower for a second day, slipping below $18,000 to the lowest in almost two weeks.    "The momentum that characterized bitcoin throughout October and November seems to have cooled down," Matt Blom, head of sales and trading for the cryptocurrency-focused financial firm Diginex, told clients Friday in a note. "Prices retrace even in light of positive news."    In traditional markets, European shares fell as Germany reported record virus cases and deaths, and U.S. stock futures pointed to a lower open amid fading optimism over stimulus talks in Washington. Gold weakened 0.1% to $1,834 an ounce.  Market Moves If everyone says bitcoin is a hedge against central bank money printing, does that make it a hedge against central bank money printing?     It looks that way. Or at least – that's one interpretation of recent news developments and market signals.    Government-issued currencies like U.S. dollars are accepted as a form of payment because the government decrees that they be so. Such tenders are often referred to as "fiat" currencies, from the Latin, "It shall be."   Bitcoin was invented 11 years ago as a new form of electronic peer-to-peer payment built atop a blockchain network that no single government, company or person would control. But it's the limits on the cryptocurrency's supply, hard-coded into the underlying network programming, that have garnered so much attention recently from big investors: Only 21 million bitcoin can ever be created, a true stumper for monetary economists or analysts accustomed to the supply-and-demand calculations typically applied to commodity markets from gold to oil to cocoa to pork bellies.   As governments and affiliated central banks have created trillions of dollars of fresh money this year to combat the steep economic toll of the coronavirus, more big institutional investors are deciding that bitcoin will hold its value as fiat currencies become ever more abundant.    Take the latest announcement from MassMutual, a U.S. life insurance company with $567 billion of assets under management as of Dec. 31. As reported by CoinDesk's Danny Nelson, the insurance company said Thursday it would take a 5% equity stake in the cryptocurrency investment firm NYDIG while buying $100 million of bitcoin for a general investment account.   "There is nothing surprising to me about MassMutual leading their industry yet again by both seeing and acting on the long-term value of the bitcoin monetary risk premium for their policyowners," NYDIG Executive Chairman Ross Stevens said in a press release posted on the insurance company's website.    Notice that term: "monetary risk premium" – the idea that bitcoin will protect investors against the risk that monetary authorities just keep printing more money. It's the linchpin of the entire announcement.    "As we've seen throughout the last few weeks, the level of institutional involvement in this tiny market is growing at a very rapid pace, and it will only continue to grow from here," Mati Greenspan, founder of the foreign-exchange and cryptocurrency-analysis firm Quantum Economics, wrote Thursday in a newsletter.    One takeaway is that perception might be turning into reality. If enough smart, powerful people with deep pockets decide that bitcoin is a hedge against the risk of monetary easing, then fiat: It shall be.  Bitcoin's price, denominated in euros, over the course of 2020. (TradingView/CoinDesk)  Thursday brought the news that the European Central Bank, led by President Christine Lagarde, would expand a pandemic-related asset-purchasing program by €500 billion ($607 billion) to €1.85 trillion. It's the European version of quantitative easing, where central banks pump money into markets to boost asset prices and stimulate economic growth. The ECB already has cut one of its key lending rates to negative levels, so the extra stimulus pushes monetary policy stance to an unprecedented level of looseness.      "The overall policy stance is expected to remain very accommodative," Claus Vistesen, chief eurozone economist for the forecasting firm Pantheon, told clients Thursday in a note. "This includes persistent QE, in some form or the other, and negative rates for as far as the eye can see."   First Mover has discussed extensively just how dramatically bitcoin prices have surged this year, some 156%, as the U.S. Federal Reserve printed trillions of dollars of fresh money to stimulate the economy and help finance the Treasury Department's staggering and still-growing-fast debt load of $27.4 trillion.    There's also been a lot of discussion in foreign-exchange circles of a decline in the dollar's value versus the euro, or rather the European currency's 8.2% appreciation this year versus the dollar to $1.21.   Less often quoted is bitcoin's price denominated in euros, which has climbed an also-dramatic 136% to €15,099.    Such gains might play into the perception that bitcoin is an as-good hedge against debasement of euros as it is against other the dollar. Or perhaps other currencies as well, if big investors keep buying into the premise.   - Bradley Keoun SPONSORED BY NEXO Your digital assets deserve a savings account in their BEST INTEREST. Leading crypto lender Nexo treats you, your crypto and your fiat to industry-best Crypto & Fiat services, featuring:    * Up to 12% interest on digital assets, paid out daily! * Yields available on BTC, ETH, LTC, BCH, XRP, XLM, EOS, TRX, LINK, BNB, PAXG, USDT, USDC, TUSD, PAX, DAI, HUSD, GBP and EUR. * No minimum or maximum limits on funds deposited, offering infinite opportunities to earn. * Full flexibility with no lock-in periods, so you can withdraw your funds anytime. * #ZeroFees on all transactions. * Military-grade wallet security and top-tier insurance on all custodial assets with SOC 2 Type 2 certified crypto custodian BitGo.   Get started at nexo.io Bitcoin Watch Bitcoin was losing ground Friday amid a risk-off mood in traditional markets.   The top cryptocurrency by market value is trading near $17,700 at press time, representing more than a 3% drop on the day. Meanwhile, major European stock markets and the futures tied to the S&P 500 are flashing red on Brexit uncertainty and the seemingly never-ending U.S. fiscal stimulus negotiations.   The sour mood is giving a lift to the U.S. dollar in foreign-exchange markets, putting extra pressure on dollar-denominated bitcoin.    Short-term technical studies are beginning to roll over in favor of the bears. The widely-tracked 14-day relative strength index has dropped into the bearish territory below 50 for the first time since Oct. 6. Back then, bitcoin was trading near $10,500.   The RSI's bearish turn comes following the cryptocurrency's recent downside break of a narrowing price range. As such, support of the two-month rising trendline, currently at $17,000, stands exposed. Some investors have positioned for an extended pullback, as discussed earlier this week. - Omkar Godbole   Read More: Wallets With Over 1,000 Bitcoin Have Hit Record Number, Chainalysis Says Looking to make someone (or just yourself) happy this Yuletide holiday? Give the gift of crypto art.   As part of the launch of Most Influential 2020 list, CoinDesk is auctioning off 12 original artworks that accompany this year's list of honorees.   The NFTs were created by leading digital artists including Alotta Money, XCopy, Osinachi, Matt Kane, Sarah Zucker, Yonat Vaks, and Olive Allen. They are available at Nifty Gateway and Super Rare (Matt Kane). The artists will donate 50% of the proceeds to charities of their choice, under an arrangement with cryptocurrency donations company The Giving Block.   Learn more about the Most Influential 2020 NFT art auction, running to Dec. 31. What's Hot Crypto-friendly CFTC Chair Tarbert intends to step down from leadership position early next year (CoinDesk) India's banks are once more serving crypto traders and exchanges (CoinDesk)  Bitcoin whales buy high, sell low; retail investors chase rallies, data show (CoinDesk)  Ethereum blockchain ecosystem boasts almost 2,300 developers on average, far outpacing No. 2 Bitcoin's roughly 400, Electric Capital report shows (CoinDesk)  JPMorgan completes live blockchain repo trade ahead of new product launch (CoinDesk)  Bitcoin chart views soared along with price in November, TradingView says (CoinDesk) Binance Smart Chain successfully integrates Chainlink decentralized oracle network (Binance) Analogs The latest on the economy and traditional finance U.S. unemployment claims rise to highest level since September (WSJ)  No-deal Brexit more likely as dinner meeting between U.K., European Commission top officials leaves teams believing a compromise may not be possible before time runs out (Bloomberg)  Missouri Republican Senator Josh Hawley introduces bill to provide second round of $1,200 stimulus checks (CNBC) Mortgage originations on pace for best year ever with 30-year interest rates below 3% (WSJ)   Stimulus talks drag as U.S. legislative leaders McConnell, Pelosi give no sign they're ready to engage (Bloomberg)   Pricing the S&P 500 in hourly pay shows fourfold rise in decade (Bloomberg)  Realty investment arm of the world's largest asset manager, BlackRock, has received an additional $53M capital commitments for its fifth Asia-focused fund (Nikkei Asia Review)   Tweet of the Day Mastering Blockchain: A Virtual Book Launch in a Physically Distant Yet Still-Connected World "Mastering Blockchain: Unlocking the Power of Cryptocurrencies, Smart Contracts, and Decentralized Applications" by Daniel Cawrey and Lorne Lantz from O'Reilly Media is a masterful guide on the essentials of blockchain technology, presenting history, breaking down fundamentals, and providing real-life implementations covering the space with clarity and precision based on years of research and conversations with the space's leading minds.    In partnership with the Silicon Valley Bitcoin and Silicon Valley Ethereum meetup groups, CoinDesk celebrates Cawrey and Lantz's book launch with a fireside chat with the authors and CoinDesk's first-ever VR event on Dec. 15, 2020, at 7 p.m. ET.   Join us for the CoinDesk Live event streaming on CoinDesk.com, YouTube and Twitter as we chat about the book, socialize in VR and discuss the future of IRL and virtual events. Learn more. Introducing the Most Influential 2020 Who moved the needle on crypto this year? What were the projects that mattered? Who shattered the glass ceiling and broke the mold? From DeFi to bitcoin's late year surge, 2020 was full of big stories, trends and personalities. We've unveiled CoinDesk's 2020 Most Influential list, a selection of 12 people who helped push the industry forward this year. See who made the list. The latest CoinDesk Monthly Review compares bitcoin's November 2020 rally with the asset's market and network performance three years ago and looks at some metrics on the progress toward the launch of Ethereum 2.0. Download the free CoinDesk Research November 2020 Review. 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.  ATTENTION: Scammers have been sending fraudulent emails with links to sites disguised to look like coindesk.com. If you are in doubt about a link, type https://www.coindesk.com directly into your browser; do not copy and paste. Remember, if something seems too good to be true, it probably is. First Mover   A newsletter from CoinDesk   See Previous Editions Copyright © 2020 CoinDesk, All rights reserved.    250 Park Avenue South New York, NY 10003, USA You can manage your preferences here or unsubscribe from all CoinDesk email.