Bitcoin Falls to $32K: Does the Fed Matter to Crypto Right Now?

PLUS: Ether buyers come in at $1,900

Everything you need to make sense of the crypto markets and beyond By the CoinDesk Markets Team Edited by Lawrence Lewitinn, Managing Editor, Global Capital Markets July 14, 2021 Sponsored by     Bitcoin (BTC) -2.0%  $32,504 Ether (ETH)  -4.2%  $1,942 (Price data as of July 14 @10:45 UTC) If you were forwarded this newsletter and would like to receive it, sign up here.  Good morning, and welcome to First Mover. Here's what's happening this morning: Market Moves: Bitcoin Dips Below $32K as Fed Rate-Hike Bets Rise; Gold Remains Resilient "It's hard to read too much into the price action currently while we're still stuck in this range," one observer said.   Technician's Take: Ether Erases Early Losses, Faces Resistance Above $2K "We would add exposure if ether can confirm a breakout above its 50-day MA," one chart analyst said. And check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Emily Parker and me at 9:00 a.m. U.S. Eastern time. Today the show will feature guests: Caitlin Long, Avanti Bank Founder & CEO Olta Andoni, Nifty's Chief Legal Officer María Paula Fernandez, Golem Network Advisor  – Lawrence Lewitinn Biggest Movers These are the biggest movers in the CoinDesk 20 over the past 24 hours:   Gainers: None of the CoinDesk 20 digital assets is up today. Losers: Uniswap (UNI): -10.9% Aave (AAVE): -8.8% Tezos (XTZ): -8.3% The Graph (GRT): -7.7% The CoinDesk 20 are 20 digital assets filtered from the larger universe of thousands of cryptocurrencies and constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges. A message from ByBit Earn up to $600 in rewards when you sign up with Bybit!    Top crypto exchange featured on Bloomberg. Trade Bitcoin, Ethereum, Doge, and more!   Check out all our exciting promotions just for you! Lots of attractive bonuses available when you sign up with us.    Spot, derivatives trading and other options available.    Sign Up Now!    Market Moves by Omkar Godbole Bitcoin Dips Below $32K as Fed Rate-Hike Bets Rise; Gold Remains Resilient Bitcoin extended Tuesday's decline even as gold, a traditional inflation hedge, remained resilient to increased bets on faster monetary-policy tightening by the Federal Reserve (Fed).   The leading cryptocurrency was trading near $32,300 at press time, a 1.4% drop on the day. Prices hit a 2 1/2-week low of $31,669 early today, having run into offers above $33,000 on Tuesday, CoinDesk 20 data show.   The drop to the lowest since June 26 comes a day after futures tied to the federal funds rate and eurodollars, which track short-term interest-rate expectations, raised bets on Tuesday that the Fed would increase interest rates between December 2022 and the first quarter of 2023. According to Reuters, the repricing happened after the U.S. Labor Department said the consumer price index increased 5.4% year-on-year in June, the fastest pace since 2008.   Rate hikes, or possible tapering as signaled by Federal Reserve Bank of St. Louis President James Bullard, boost the attractiveness of holding fiat currencies, in this case the dollar, and dilute the appeal of perceived store-of-value assets such as bitcoin (BTC) and gold.   However, while bitcoin is nursing losses, gold is currently trading 0.35% higher on the day at $1,814 an ounce. The discrepancy spurred Amber Group, a crypto services provider, into calling for caution in reading too much into the rate-hike narrative for the time being.   "Bitcoin's weakness this morning could be associated with the Fed rate-hike fears," Amber Group said. "However, it's hard to force this rate-hike narrative as a headwind if other risk assets (stocks) are hitting new highs and gold remains bid." Gold versus bitcoin, 2 months (Source: CoinDesk, St. Louis Federal Reserve Bank, Yahoo Finance) Trader and analyst Alex Kruger said the cryptocurrency has been looking heavy for a long time, courtesy of weak flows, and "the CPI may have helped."   That said, some analysts say concerns over tightening or gradual unwinding of stimulus may not be a threat to traditional markets, but present immediate downside risk to bitcoin.   "Is tapering a real concern? Not for broad markets, but arguably it is a risk for bitcoin, considered by fiat-based institutional investors at the extreme end of the risk spectrum," Messari's Mira Christanto said in a blog post dated May 27. "Capital to this new asset class is still mercenary and tends to over-react on the bull and bear side."   The mid-May sell-off from $58,000 to $30,000 occurred after a reported surge in U.S. inflation for April increased concerns that the Fed may consider an early rate increase or reduction of liquidity-boosting asset purchases, known as quantitative easing.   Stack Funds' COO Matthew Dibb said, "the recent increase in fed rate-hike bets may not bode well for BTC in the short term, as the recent correlation is more tied to equities, liquidity and retail sentiment, rather than BTC being a 'hedge' to inflation."   Dibb said the cryptocurrency has been looking weak on technical charts for the past few weeks, and the latest U.S. CPI release may add to the selling pressure.   However, while bitcoin has come under pressure this week, it is still locked in the broad two-month range of $30,000 to $40,000. "It's hard to read too much into the price action currently while we're still stuck in this range," Amber Group said. Read the original story here: Bitcoin Dips Below $32K as Fed Rate-Hike Bets Rise; Gold Remains Resilient The CoinDesk Quarterly Review 2021 Q2 After two consecutive quarters of strong price gains for most of the top crypto assets, Q2 2021 finally brought an end to market euphoria with a resounding crash. Most CoinDesk 20 assets, which constitute 99% of the crypto market by verifiable volume, ended the quarter with negative returns. Meanwhile, protocol development for the world's largest cryptocurrencies by market capitalization, Bitcoin and Ethereum, reached new milestones. CoinDesk Research's latest Quarterly Review dives into the trends, developments and technological progress that shaped the crypto markets from April to June 2021. The full report is now available from the CoinDesk Research Hub. Technician's Take by Omkar Godbole Ether Erases Early Losses, Faces Resistance Above $2K Ether (ETH) buyers stepped in below $1,900 on Wednesday, helping the second-largest cryptocurrency erase early losses. At press time, the native cryptocurrency of Ethereum's blockchain was trading unchanged on the day near $1,941. Ether hourly and daily charts (Source: TradingView) The relative strength index on the hourly chart shows bullish divergence and scope for further upside. The RSI on the four-hour chart also favors a recovery rally, while the weekly chart stochastic is signaling interim oversold conditions. The upside signaled by short-term indicators may run into resistance near $2,040. That level is currently housing the widely-tracked 200-day simple moving average (SMA) resistance. A break higher would expose the make-or-break 50-day SMA hurdle lined up at $2,310. "We would add exposure if ether can confirm a breakout above its 50-day MA, as with bitcoin, with next resistance on the chart above $3,000," Katie Stockton, founder, and managing partner of Fairlead Strategies, said in the weekly research note published Monday. Support levels to watch out for are the daily low of $1,865 followed by the June low near $1,700.   Read the original story here: Ether Erases Early Losses, Faces Resistance Above $2K A message from Exeno Spending  cryptocurrencies without FIAT conversions   The number of crypto transactions reached its peak in 2020-2021. Many credible investors are looking for new opportunities to realize profits. Especially without the extra costs of high taxes and large fees.   Exeno is the first e-commerce platform that allows customers to make purchases using cryptocurrencies only (BTC, ETH, BTCV). The key Exeno's features are no FIAT conversions and low commission: 1.8% per purchase.    Learn more BOLO Be on the look out for some of these upcoming events: 16:00 UTC (12:00 p.m. ET): Chair Jerome H. Powell's testimony before the U.S. House Committee on Financial Services Semiannual Monetary Policy Report to the Congress Watch live   18:00 UTC (2:00 p.m. ET): Federal Reserve's Beige Book The cryptocurrency movement has never been so sprawling, reaching every corner of the planet. Crypto State by CoinDesk aims to connect with local communities to explore this movement of financial disruption and how it trickles down to every corner of the globe, from DeFi investment opportunities to alternative ways to transact and store wealth. We're making virtual stops with audiences in Nigeria, the Middle East and Southeast Asia this year. Register for the Crypto State virtual tour. ICYMI In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:   Binance.US CEO Brian Brooks Weighs in on Recent Global Regulatory Warnings, Sen. Pat Toomey on US Crypto Regulations Outlook Binance.US CEO Brian Brooks joins "First Mover" since the firm hired former California regulator Manuel Alvarez as its new Chief Administrative Officer. This comes as global regulators are zooming into Binance. Senator Pat Toomey has more on congressional regulatory outlook on crypto in the U.S., and Haohan Xu of Apifiny on crypto markets outlook. The Investor's Perspective on the Bitcoin Taproot Upgrade   Taproot is a bundle of three upgrades to Bitcoin aimed at improving network security, privacy and scalability. At the same time, it poses some potential drawbacks to Bitcoin including risks of low adoption, unintended privacy shortcomings and Bitcoin community disappointment and fracturing. CoinDesk Research's newest report dives into the economic impact and investment implications of the Taproot upgrade.   Download the full report. Latest Headlines Visa Approves Australian Startup to Issue Debit Cards for Spending Bitcoin The move by Visa to allow the issuance captures the growing interest in cryptocurrencies for Australia's economic market. Paraguay Proposed Bitcoin Law Includes Crypto Registration: Report The bill reportedly seeks to regulate ownership and registration of crypto as well as crypto mining operations. Q2 Revenue Surges at Travel Booking Platform Travala The Binance-backed company has been rebounding along with the travel industry, and as consumers embrace its blockchain travel booking platform. Four Arrested in Japan for Allegedly Cheating $54M From Thousands of Investors: Report Investors say the men ran a crypto scheme known as the "Oz Project", which purported to automatically trade through the use of AI. Ethereum ETF to List on Brazil's Stock Exchange The fund will trade on the Sao Paulo-based B3 exchange under the ticker QETH11, QR Capital said. Three More Chinese Provinces Shutter Crypto Mines as Clampdown Continues Henan, Gansu, and Anhui provinces are the latest provinces to crack down on crypto mines to curtail energy use. 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 Copyright © 2021 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.