Bitcoin at $41K is Lowest in Almost Four Months

Price chart might be setting up for fresh bull run

The latest moves in crypto markets, in context Edited by Omkar Godbole January 7, 2022 Sponsored by     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 heads for its worst week since late November as traders nowhere want to fight the Fed.  PLUS: Ether Sees Higher Liquidations Than Bitcoin After Falling Under $3.2K Technician's Take: Price charts for bitcoin are setting up a pattern that previously preceded a rally. But it could still break down.  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. Today's show will feature guests: Paul Brody, principal and global innovation leader, Ernst & Young (and CoinDesk contributor) Ben McMillan, CIO, IDX Digital Assets Martin Wainstein, founder and executive director, Open Earth Foundation Market Moves Bitcoin fell to $41,012 during Friday's Asia session, hitting the lowest level since Sept. 29, CoinDesk data show.   The bitcoin price has declined this week – down 12%, in the worst showing since late November – as the U.S. Federal Reserve signaled it could move to accelerate interest-rate increases and even start shrinking its $8.3 trillion balance sheet to combat inflation that's rising at the fastest pace in almost four decades.    A U.S. Labor Department release ("December jobs report") on Friday showed that the nation added 199,000 jobs during the month or roughly half the 400,000 that economists had projected.    But the unemployment rate still declined by 0.3 percentage point to 3.9% – possibly a sign that employers are simply having trouble finding qualified workers at current wage levels. Additional upward pressure on employee pay scales could lead some businesses to try to pass through those price increases, possibly spurring the Fed to step in to cool the economy.     While bitcoin is often cast as a hedge against inflation, it often sells off with traditional markets when the Fed moves to tamp down any froth.    "Bitcoin has been trading as a risk-of/risk-off asset lately and seems to be tracking equities lower," Jeff Dorman, CIO at Arca, told CoinDesk in a Telegram chat. Bitcoin's weekly price chart – each candle represents a single week's price moves – puts the latest market action into context. (TradingView) Laurent Kssis, a crypto exchange-traded fund (ETF) expert and director of CEC Capital, said about $200 million in long positions have been liquidated in the past couple of hours, pushing the spot price lower. Kssis added that leverage remains high and a further drop below $40,000 may be seen, more so if bond yields continue to rise on the Fed's hawkish stance.   The popular narrative is that Fed's plans to shrink its balance sheet and raise rates concurrently could lead to prolonged asset price deflation.   "It's time to evaluate the conviction you have in whether positive interest rates could damage equity portfolio and see further global downward pressures," Kssis said. "A 60/40 equities-to-bonds portfolio mix means that if the 60% in equities declines, big fund managers automatically sell bonds to maintain the ratio."   "So if the Fed allows equity prices to fall, it will increase the borrowing costs of the governments because as bond prices fall, yields rise !!! That could trigger more selling in BTC," Kssis added.   On Thursday, the U.S. two-year treasury yield, which mimics short-term interest rate and inflation expectations better than the 10-year yield, rose to a 22-month high of 0.87%. The short-term yield has more than doubled to 0.76% in the past quarter, according to TradingView.    According to Brent Donnelly, president at Spectra Markets, the macro story has got worse for crypto in the past few months. "Stay bearish crypto as Fed's QT plan accelerates. The macro story has got even worse for crypto since I started talking about the crypto bear case in November," Donnelly said in an analysis note shared on Twitter. Read More: Bitcoin Slips To 3-Month Low, Analysts Divided on Impact of Fed's Tightening Ether Sees Higher Liquidations Than Bitcoin After Falling Under $3.2K By Shaurya Malwa Traders racked up $182 million in losses on ether-tracked futures products in the past 24 hours, according to data from analytics tools Coinglass. That is $14 million higher than bitcoin-tracked futures, which usually see the largest liquidations in the crypto market, during a comparable period.   Liquidations occur when an exchange forcefully closes a trader's leveraged position as a safety mechanism due to a partial or total loss of initial margin. This happens primarily in futures trading, which only tracks asset prices, as opposed to spot trading, where traders own the actual assets.   More than 87% of the total $182 million in losses came from long positions, while only $22 million worth of short positions were liquidated. Majority of the liquidations occurred on crypto exchange OKEx, which saw just under $79 million in losses, followed by FTX at $27.55 million.   Longs are futures positions that bet on rising prices of their underlying assets. Shorts, on the other hand, are futures trades that bet on declining prices.   Ether lost the $3,300 support level in early Asian hours on Friday, plunging to as low as $3,113 before briefly gaining over $90 at the time of writing. Friday's drop was a continuation of a market-wide decline that started on Wednesday. The U.S. Federal Reserve released the minutes of its December meeting that signaled tightening of financial policies and caused a sell-off in risky ass Read More: Ether Sees Higher Liquidations Than Bitcoin After Falling Under $3.2K A Message from Grayscale What if you could see around the corner?   As the world's largest digital currency asset manager, Grayscale is an industry leader, offering products inspired by where the world is going.    From established cryptocurrencies like Bitcoin and Ethereum, to the native coins of emerging projects, Grayscale applies its expertise and research to identify and bring investors opportunities that provide exposure to the growing ecosystem of digital assets.   Learn more about Grayscale's funds on our website and invest through your brokerage account: grayscale.com/products Crypto Prices Bitcoin (BTC) See the latest price here Ether (ETH)  See the latest price here The following are the biggest movers in the CoinDesk 20 digital assets over the past 24 hours: Biggest Gainers: Asset Ticker Returns Sector Cosmos ATOM +17.4% Smart Contract Platform Chainlink LINK +4.6% Computing Cardano ADA +2.0% Smart Contract Platform Biggest Losers:  Asset Ticker Returns Sector Solana SOL −5.3% Smart Contract Platform Algorand ALGO −4.6% Smart Contract Platform Ethereum ETH −3.8% Smart Contract Platform 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.  A Message from Horizen Happy Holidays from the Horizen Team! Join our holiday giveaway to win some $Zen   Horizen is the zero-knowlege network of blockchains powered by the largest and most decentralized node system. Its blockchain deployment protocol, Zendoo, is live on mainnet as of Dec 1st 2021!   Zendoo enables developers and businesses to deplot provate and public blockchains with unmet scalability, flexibility, and throughput to support any real-world needs.  Latest Headlines Turkish Lira Is Now More Volatile Than Bitcoin Users of Hong Kong Crypto Exchange Coinsuper Say They Cannot Withdraw Funds Latin American Crypto Exchange Bitso to Sponsor São Paulo Football Club Argo Blockchain Monthly Revenue Drops Even as It Mined More Bitcoins Solana DeFi Major Serum's 'Incentive Ecosystem Foundation' Is Raising $100M Avalanche-Based Wonderland Makes Seed Investment in Betting Dapp Katie Haun Seeks $900M for Crypto Funds After A16z Departure: Report GameStop Surges Following Report It's Launching an NFT Marketplace The Inside Story of How India's Crypto Exchanges Were 'Inspected' by Tax Agencies New Year, New Money New Money, a new series by CoinDesk, explores what it means to be part of the new "creator economy." In the talk show hosted by Spencer Dinwiddie and Solo Ceesay, we hear from pro athletes, celebrities and social media influencers who are on the cutting edge of interacting directly with fans and developing new ways to generate revenue from their own celebrity. Learn more here. Technician's Take By Omkar Godbole Bitcoin's daily chart shows price action similar to mid-July before rally to all-time high of to almost $69,000 began. But it looks a bit fragile. (Source: TradingView)  Bitcoin's price chart might be setting up for bull run – but it's fragile Bitcoin's recent four-week price action appears similar to the accumulation seen around $30,000 in the two months to mid-July after which bitcoin resumed the bull run.   A UTC close under the Dec. 4 low of $42,000 would weaken the possibility of bitcoin following the Q2, 2021 bullish pattern. ICYMI In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:   Crypto Markets Tumble, CoinDesk's Annual Digital Assets Review, Australian Open in the Metaverse "First Mover" dives into the crypto markets with CoinDesk research analyst George Kaloudis for your first look at the latest CoinDesk Annual Review. Jam packed with data and analysis on crypto performance and trends, the hosts and Kaloudis discuss the implications for 2022. Also, the Australian Open announces its metaverse project on the heels of news that tennis superstar Novak Djokovic's visa has been denied. Guests are Ridley Plummer, Metaverse and NFT project manager of the Australian Open and Adam De Cata of Run It Wild. 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.  First Mover A newsletter from CoinDesk Were you forwarded this newsletter? Sign up here.  Copyright © 2021 CoinDesk, All rights reserved.  250 Park Avenue South New York, NY 10003, USA Manage your newsletter subscriptions  |  Unsubscribe from all CoinDesk email