Bitcoin Traders Await Federal Reserve Minutes as 'Paper Hands' Capitulate

Price chart for Dfinity's ICP token suggests bullish breakout

The latest moves in crypto markets, in context Edited by Omkar Godbole January 5, 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 changes hands around $46,300 while traders await release of minutes from Federal Reserve's December meeting, potentially offering clues for the U.S. central bank's strategy for tamping down fast-rising inflation.  PLUS: "Paper hands ratio" for bitcoin suggests individual crypto traders have capitulated, a historically bullish signal.  Technician's Take: Price chart for Dfinity's ICP token suggests bullish breakout. 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: Marco Di Maggio, professor of business administration, Harvard Business School Seth Ginns, managing partner and head of liquid investments, CoinFund BlockbusterDAO founder (anonymous) Market Moves Bitcoin's daily price chart shows the cryptocurrency's price holding range support. (TradingView) Bitcoin (BTC) held critical support even as traditional risk assets dipped amid improved prospects of an early rate hike by the U.S. Federal Reserve.   Crypto traders are monitoring the developments along with the planned release Wednesday of the minutes from the central bank's December meeting – for clues on officials' plans for attacking fast-rising inflation. A growing number of investors see bitcoin as a possible hedge against rising prices.      The top cryptocurrency by market value rose 1% to $46,300, ensuring a continued squeeze in a four-week trading range of $45,400-$52,100. On Tuesday, the lower end of the trading range came into play, but sellers failed to push through the long-held support.   Asian stocks dipped along with the S&P 500 futures and tech-heavy Nasdaq futures. Gold posted marginal gains while copper and other growth-sensitive industrial metals faced losses. The anti-risk currencies like the U.S. dollar, Swiss franc and Japanese yen traded flat to positive, according to Investing.com. The CME's FedWatch Tool now shows a 58% probability that the Fed will hike rates by March, the first increase since late 2018. (CME) According to the CME Group's FedWatch Tool, investors were pricing a 58% probability of the Federal Reserve raising the benchmark U.S. interest rate by 25 basis points (0.25 percentage point) in March.   That's a significant increase from the 26% probability a month ago. The central bank last month signaled three rate hikes for 2022, along with the end of its liquidity-boosting asset purchasing program in March.    Officials led by Federal Reserve Chair Jerome Powell assured markets then of a gradual pace of policy tightening. However, a continued rise in the March rate hike probability might mean faster tightening – four rate hikes, each delivered at quarterly meetings.   "If the Fed goes to four hikes next year, that is a big statement," John Turek, author of the Cheap Convexity blog, said in a blogpost published Dec. 29. "That means either two things. First, they are hiking in March, which would be no gap between the end of QE and the first hike. Not impossible, but that is a big statement about intent."   "If they don't go in March and want to go four times next year, that means they will be hiking at a rate faster than quarterly, which is not something they have done in over a decade," Turek wrote. Read More: Bitcoin Holds Support Ahead of Fed Minutes, March Rate Hike Probability Rises 'Paper Hands Ratio' From Blockchain Analysis Suggests Bitcoin May Squeeze Higher According to some analysts, whenever the "paper hands" ratio falls below 25%, it signals capitulation selling by individual crypto traders. (GlobalBlock/Glassnode)   Bitcoin could be in for a recovery rally, as retail interest declines, analysts told CoinDesk.   "Whilst bitcoin remains flat in the short term, on-chain metrics like the paper hands ratio from Glassnode suggest a bottom could be nearing," Marcus Sotiriou, analyst at the UK based digital asset broker GlobalBlock, told CoinDesk in an email.   The BTC paper hands ratio is the ratio of young coins active in the last six months to the cryptocurrency's circulating supply. A high reading represents greed among retail or short-term traders, while a low number signals retail disinterest.   Retail investors are often referred to as having paper hands – weak capacity or desire to hold an asset for a long time – and are usually the last to enter the bull run and exit the bear run. Hence, declining retail activity is considered a contrary indicator – a hint of an impending reversal higher. Read More: Bitcoin May Squeeze Higher As Retail Interest Subsides: Analyst A Message from Grayscale Ready to explore the metaverse?   Analysts predict that the metaverse could be a trillion-dollar revenue opportunity across advertising, social commerce, digital events, hardware, and developer/creator monetization.* This creates a unique investment opportunity in the new digital economy.   Grayscale gives investors a way to access the early opportunity of the Metaverse through Grayscale®' Decentraland Trust by investing in MANA, Decentraland's native token. Decentraland is one of the leading metaverses built on the Ethereum blockchain.    Invest in the metaverse with Grayscale** Learn more here     *The Metaverse Report 2021 **Private placement available to accredited investors only 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 Internet Computer ICP +12.5% Computing Chainlink LINK +6.1% Computing Filecoin FIL +1.9% Computing Biggest Losers:  Asset Ticker Returns Sector Polygon MATIC −3.0% Smart Contract Platform Cosmos ATOM −2.3% Smart Contract Platform Bitcoin Cash BCH −1.9% Currency 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.  Technician's Take by Omkar Godbole Dfinity's internet computer (ICP) token sets up bullish crossover The falling wedge breakout, a bullish reversal pattern, seen on ICP's daily chart points to scope for a notable rally, subject to broader market stability.   ICP is the utility token allowing holders to participate in and govern the Internet Computer blockchain network. ICP's daily chart showing a bullish breakout (Source: TradingView) 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 Bitcoin Can Reach $100,000 In 'Hypothetical' Store of Value Boost, Goldman Sachs Says Chainlink Jumps While Bitcoin Stages Recovery Crypto.com Sees 2 Ads Banned by UK's Advertising Regulator Billionaire Alan Howard Joins Latest $20M Bet on Decentralized Video Network Livepeer German Miner Northern Data Shares Jump Following Operational Update NFT Marketplace OpenSea Valued at $13.3B in $300M Funding Round: Report Quentin Tarantino to Release 'Pulp Fiction' NFTs, Flouting Miramax Lawsuit CoinDesk Joins Court Case Seeking Access to NYAG Tether Documents Drone Racing League Zooms Into Metaverse, Bringing 'Play to Earn' to Algorand The State of Ethereum's Fee Market Introducing CoinDesk's new Digital Asset Classification Standard, which was created in response to the significant growth of the number and types of digital assets offered in the market and the realization that traditional classification standards used for equities and other asset classes could not be adapted accurately to classify digital assets. Read more about DACS. ICYMI In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:   Breaking Down Web 3.0, The Near Foundation, Kavita Gupta's New Fund "First Mover" dives into Web 3.0, what it means to different blockchain leaders, and do their plans include Ethereum? Joining the show to discuss this major theme of 2022 are the Near Foundation's new CEO, Marieke Flament, and Kavita Gupta, founder of the new Delta Blockchain Fund. Also, Ronnie Moas of Standpoint Research shares his crypto markets analysis. 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