The latest moves in crypto markets, in context Was this newsletter forwarded to you? Sign up here. |
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Good morning, and welcome to First Mover. Here's what's happening this morning: - Market Moves: Bitcoin trades at a premium in the Japanese yen markets.
- Chartist's Corner: Spike in global FX volatility, boon or curse for bitcoin?
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. - Haseeb Qureshi, managing partner, Dragonfly Capital
- Dan Jeffries, managing director, AI Infrastructure Alliance
Today's newsletter was edited by Omkar Godbole and produced by Bradley Keoun. Let us know what you think by replying to this email. |
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Bitcoin (BTC) traded higher for the second day as the yen and euro tanked against the dollar and a gauge of FX market volatility hit a two-year high. The top cryptocurrency by market value neared $40,000, having jumped 3% to $39,000 on Wednesday, CoinDesk data shows. Ether (ETH), the second-largest cryptocurrency, rose 1%, topping $2,900. The Japanese yen slipped to 130.80 per U.S. dollar, the lowest in 20 years. The currency has fallen more than 10% in seven weeks. While such rapid moves are the norm in crypto markets, they are rare in currency markets and perhaps damaging to nations. Sharp currency depreciation imports inflation and often has domestic investors pouring money into the perceived store of value assets like bitcoin and gold. Bitcoin has recently been drawing a premium in Japanese yen markets. Still, it may be too early to say that cryptocurrency is the preferred safe haven of investors exposed to the yen's volatility. "Bitcoin traded at a consistent premium on Japanese markets since the start of April," Dessislava Aubert, analyst at Kaiko Research, told CoinDesk in an email. "However, BTC-JPY trade volumes remained low, which does not indicate a durable increase in demand in local markets." Aubert added that volumes could pick up if Japan decides to loosen its coin listing regulation. |
Bitcoin premium on Japanese markets. (Kaiko Research) |
Why is the yen falling? Experts say the increasingly divergent central-bank policy has driven the yen's slide this year. While the Federal Reserve hiked rates in March and plans to raise rates six more times by year-end, the Bank of Japan has remained committed to money printing. "The growing monetary policy divergence between the U.S. Fed and the Bank of Japan alongside higher commodities prices have put significant pressure on the Japanese currency with the JPY touching 20-year lows against the U.S. Dollar," Aubert said. Bitcoin's programmed tightening path While the BOJ is moving in the other direction from the Fed, bitcoin's monetary policy is on a programmed tightening path. Bitcoin's pace of supply expansion is reduced by 50% every four years, and the so-called reward halving is due in 2024, after which the per block reward would drop from 6.25 BTC to 3.125 BTC. Even so, the cryptocurrency has lost over 40% in five months, mainly due to the Fed rate hike fears. |
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Chart showing declining trading volumes on Liquid, one of the highest volume Japanese exchange recently acquired by FTX. (Kaiko Research) |
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The following are the biggest movers in the CoinDesk 20 digital assets over the past 24 hours: |
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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. |
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BCB Group is a leading global provider of business accounts and trading services for the digital asset economy. We provide accounts and payments processing for the pillars of the industry and through our BLINC payments network participants can settle instantly 24/7/365 in any of the currencies supported, with no limits. Our clients can trade FX and cryptocurrencies quickly, at scale, with market-leading value. BCB was built to provide durable financial infrastructure in a volatile environment. |
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Spike in Global FX Volatility: Boon or Curse For BTC? By Omkar Godbole |
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JPMorgan's global FX volatility index. (Michael Brown, head of intelligence at Caxton Payments, Bloomberg) |
JPMorgan global FX volatility index, which tracks three-month option volatilities, has jumped to a two-year high of 10.20, the highest in two years, according to data tracked by Bloomberg. Bitcoin is widely considered a safe haven and digital gold in the crypto market. So, one may consider the rising FX volatility a boon for cryptocurrency. However, past data suggests that cryptocurrency does well in a declining FX volatility environment. |
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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. |
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Bitcoin Draws Premium in Yen Markets, FX Volatility Spikes