Sept. 15, 2022

The latest moves in crypto markets, in context

Was this newsletter forwarded to you? Sign up here.

Supported by

Good morning, and welcome to First Mover. I'm Lyllah Ledesma, here to take you through the latest in crypto markets, news and insights.

In today's newsletter:

Price Point: Both bitcoin and ether trade flat after Ethereum successfully completed its much anticipated Merge earlier Thursday. Ether futures market discount evaporates after the Merge.
Market Moves: Ether's one- and three-month implied volatility gauges have come off sharply from Tuesday's high as Ethereum's high-anticipated technological change of how its blockchain verifies transactions went smooth early today.
Chart of the Day: Bitcoin's mean net inflows surge to a six-year high.

Price Point

Ethereum's historic change of the way it processes transactions went live early Thursday without any hiccup, disappointing traders positioned for a spurt in volatility.

The so-called Merge, marking the network's shift to a more energy-efficient "proof-of-stake" happened at 6:43 UTC, following which ether (ETH) witnessed a short-lived spike from $1,600 to $1,655. At press time, bitcoin (BTC) and ether were trading flat on the day.

"Happy Merge Day. Historic day in Crypto as the Merge completes successfully and somewhat uneventfully which is a testament to ETH Devs," over-the-counter institution-focused tech platform Paradigm said in its Telegram broadcast, taking note of subdued price action and a drop in ether's implied volatility or expectations for price turbulence.

Stock futures pointed to a second day of calmer trading as investors weighed in recent indications that the Federal Reserve will have to take tougher action to combat inflation than many had hoped.

"I still think we have not seen the bottom in crypto markets. After the higher than expected inflation numbers, the terminal rate has been adjusted from previous 3.5% to 4%, which means that there is still a long way to go in interest rate hikes," said Pablo Jódar, an independent crypto analyst.

"Obviously, this is not good for growth stocks nor crypto, as higher interest rates reduce demand for risky assets. We need to see a meaningful change in inflation data to see a reversal in market tendency."

Ethereum Classic and Lido DAO were trading up 5.7% on the day.

Ether futures market discount evaporatesafter the Merge

CoinDesk's Omkar Godbole reported that the month-long ether futures market anomaly that stemmed predominantly from traders looking to profit from Ethereum's technological change, the Merge, has reversed.

Ether futures have almost caught up with the cryptocurrency's underlying spot price following the historic overhaul of the way Ethereum verifies transactions.

The annualized rolling discount in one-month bitcoin futures listed on Deribit, the world's largest crypto options exchange, narrowed to 0.3% from 17.66% before the changeover, which went live at 6:43 UTC, according to data provided by Skew.

Ether moves to centralized exchanges

A large amount of ether was moved to centralized exchanges ahead of the Merge.

Cryptocurrency lender deposited 450,000 ETH worth $720 million to leading digital assets exchange Binance late Wednesday, according to data tweeted by Nansen's CEO Alex Svanevik. While crypto exchange Bitfinex received 288,442 ETH worth $490 million.

The cumulative inflow of $1.2 billion is supposedly the largest in six months. The total number of ETH held in centralized exchange wallets has jumped to a two-month high of 25.34 million.

With nearly a decade-long track record of being the world's largest digital currency asset manager, Grayscale is an industry leader in offering investors secure and regulated access to crypto.

Grayscale brought the world's first publicly-traded Bitcoin investment fund, GBTC, to market, and have since expanded our full product suite to 17 products total, including both single-asset funds as well as diversified funds that cover industry themes such as the metaverse, privacy, and data.

Grayscale is committed to the crypto economy and our investors. This includes working closely with regulators, selecting best-in-class service providers, and collaborating with industry participants to discover and bring to market exciting new products.

Learn more about Grayscale here. Investing involves risks and the possible loss of principal.

Market Moves

Ether's Implied Volatility Slides as Merge Goes Smooth

By Omkar Godbole

Ether's one- and three-month implied volatility (IV) gauges have come off sharply from Tuesday's high as Ethereum's high-anticipated technological change of how its blockchain verifies transactions went smooth early today.

"The large volatility event did not happen and once the first block was finalized for the proof-of-stake chain, IVs started to come off," Markus Thielen, chief investment officer at BritishVirgin Islands-based IDEG Asset Management, said.

"The ease of short-term risk aversion has caused the IV of short tenor options to drop significantly, Griffin Ardern, a volatility trader from crypto asset management firm Blofin, said.

Ahead of Ethereum's so-called Merge, some traders were worried that the upgrade may run into last minute problems, injecting volatility into markets. So traders had bought short-term puts or options offering protection from price drops, Thielen told CoinDesk.

However, once the Merge went smooth, ether held steady and the puts bought in anticipation of volatility began bleeding money, forcing traders to square off their positions.

That led to a drop in the implied volatility. A rise in demand for options lifts IV and vice versa.

Chart of the Day

Bitcoin's Mean Net Inflows Surge to a Six-Year High.

By Omkar Godbole

The spread between the mean amount of BTC per transaction sent to the exchange and the mean amount withdrawn from the exchange rose to 0.84 early this week, hitting the highest in six years, according to data sourced from Glassnode.
The data indicates investors depositing lot of coins on centralized exchanges is increasing.
Exchange inflows are often taken to represent investor intention to sell.

Hex Trust is a fully licensed digital asset custodian for financial institutions and organizations. Our bank-grade platform Hex Safe™ integrates top emerging blockchains, token standards, and licensed custody services for NFTs and metaverse assets.

Institutional-grade infrastructure: providing the highest standards of protection, scalability, and compliance
Monetize digital assets: accessing DeFi, staking, and other on-chain services
Enter the metaverse: integrating NFTs in your business operations safely

Unlock the full potential of your digital assets.

Get started

Crypto Prices

The following are the biggest movers in the CoinDesk Market Index over the past 24 hours:

Biggest Gainers

Asset	Ticker	Returns	DACS Sector
Polymath	POLY	+4.97%	DeFi
Amp	AMP	+4.85%	DeFi
Rarible	RARI	+3.83%	Culture & Entertainment

Biggest Losers

Asset	Ticker	Returns	DACS Sector
Ravencoin	RVN	-13.62%	Currency
Compound	COMP	-12.12%	DeFi
Terra Luna Classic	LUNA	-8.33%	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 Market Index is a broad-market index of digital assets, weighted by market capitalization. A full description of the methodology is here.

Latest Headlines

Chiliz, Owner of Blockchain Sports-Fan Platform Socios, Names Julian La Picque as CFO
La Picque joins Chiliz from blockchain platform Covantis having previously founded Geneva-based blockchain consulting firm Uncrypted.
Bernstein: Strong Institutional Adoption of Ether Expected Following the Merge
The new economic model under the Merge combined with token burn could lead to negative token emission during periods of high demand, the report said.
South Korea Looks to Invalidate Terra Co-Founder Do Kwon's Passport: Report
The CEO of Terra along with five others were issued with an arrest warrant on Wednesday.
Crypto Exchange Coinbase Enlists Broadridge Financial to Improve Liquidity
Coinbase will use Broadbridge's NYFIX order-routing network.
Ether Futures Market Discount Evaporates After the Merge
The negative spread between futures and spot prices has narrowed from $20 to almost zero following the Merge.
Thailand's SEC Bans Crypto Firms From Offering Staking and Lending Service
The regulator recently filed a police report against Zipmex after the exchange froze withdrawals in July.
Crypto Miner F2Pool Mined the Last-Ever PoW Ether Block Before Merge
The miner used almost 30 million gwei to pay for that transaction.
Ether Flat After Successful Ethereum Merge
Ethereum's transition from Proof of Work to Proof of Stake was successfully completed just after 2:30 AM ET, or 5:30 AM GMT at block 15537391.
The Ethereum Merge Is Done. Did It Work?
The historic upgrade casts aside the miners who had previously driven the blockchain, with promises of massive environmental benefits.
Pre-Merge Ether Exchange Inflows of Over $1B Trigger Fears of Price Drop
The cumulative inflow of $1.2 billion is supposedly the largest in six months.
Craig Wright Tells Court He 'Stomped on the Hard Drive' Containing Satoshi Wallet Keys
"Otherwise people will end up forcing me into doing something I don't want to do," the self-styled Bitcoin creator told a Norwegian court.

What to watch:

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.

Jason Lau, chief operating officer, OKCoin
Sandeep Nailwal, co-founder, Polygon
Matthew Sigel, head of digital assets research, VanEck
Adam McBride, author

Which institutes are most impacting the blockchain world? Tell us your thoughts in a five-minute survey. We're welcoming responses until Sept. 7. Take the survey here.

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.