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. I'm Omkar Godbole here to take you through the latest in crypto markets, news and insights. (Lyllah Ledesma is off for the rest of the week.) In today’s newsletter: Price Point: Bitcoin is on track for its best month since October, as a busy week for U.S. economic news ends with a fresh inflation surprise. Market Moves: Ethereum classic (ETC), a cryptocurrency that's been little more than an afterthought since it forked off the Ethereum blockchain in 2016, was one of the best performers in digital-asset markets in July. Chart of The Day: Bitcoin futures premium widens as rally takes off. |
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Bitcoin (BTC) held steady even as fresh U.S. economic data showed the Federal Reserve's preferred measure of inflation rose more than expected in June. The core personal consumption price index (core PCE) came in at 0.6% month-on-month, exceeding estimates for a 0.5% rise, and accelerating from May's 0.3% jump. The pace over the past 12 months was 4.8%, compared with expectations for a rate of 4.7%. The employment cost index rose 1.3% in the second quarter, versus the expected 1.2%. While the data pointed to sticky inflation, the news barely impacted the dollar or U.S. Treasury yields, perhaps because markets remain focused on recession fears and prospects of slower Fed tightening in coming months. SPECIAL FEATURE: What is the definition of a recession? And does the U.S. economy meet the test? The discussion has suddenly become a parlor game among analysts and politicians alike. Helene Braun explains. (Spoiler alert: The bitcoin market doesn't really care one way or another.) Bitcoin traded at $23,550 at 12:45 coordinated universal time (UTC) on Friday, representing a 3% gain on a 24-hour basis. The cryptocurrency, however, was on track to end a three-month losing streak with at least an 18% gain – the biggest percentage rise since October. The relief could be attributed to speculation that inflation has peaked and the Federal Reserve (Fed) could opt for slower interest rate hikes in the coming months. While ether fell below $1,700, the native token of Ethereum’s blockchain was still up 57% for the month, the biggest rise since October. Cardano’s ADA token underperformed as Input Output (IOG), the development lab for the Cardano blockchain, pushed back Vasil, an upgrade designed to increase Cardano's scaling capabilities, by a few weeks. Vasil upgrade had been scheduled for a June release on testnet release followed by mainnet launch. Babel withdrawal suspension In related news, bitcoin holder El Salvador's Finance Minister Alejandro Zelaya said the country's decision to adopt the leading cryptocurrency as legal tender is helping the unbanked population and attracting tourism and investments. The comments come as the country's finances look weak, with a 50% loss on its bitcoin investments ahead of the $800 million sovereign bond due in January 2023. A report published by The Block, citing a restructuring proposal deck said the beleaguered Hong Kong-based crypto lender Babel Finance lost $280 million in proprietary trades with customer funds. Babel Finance suspended withdrawals and redemptions, citing market volatility and hired U.S. investment banking firm Houlihan Lokey to help chalk out a restructuring plan. Babel is one of the several crypto companies, suffering from the “crypto contagion” following the collapse of Terra and the crypto hedge fund Three Arrows Capital. Elsewhere, the Federal Reserve and Federal Deposit Insurance Corp. issued a cease-and-desist statement to crypto lender Voyager, asking to stop making false claims that its customers would have government protections. Spanish banking multinational Santander said it was planning to offer crypto products to its clients in Brazil, a sign of continued appetite for digital assets amid the bear market. |
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Ethereum classic – No, not THAT Ethereum – boasts powerful performance in July crypto comeback By Omkar Godbole |
Chart showing performance of ETC, UNI and MATIC in July. (CoinDesk/TradingView) |
July has brought relief to the crypto market, with Ethereum classic (ETC), the supposedly dead coin and not-so-similar clone of Ethereum's ether (ETH) token. The gains for ETC came as other out-of-favor coins like UNI and MATIC joined the recovery in digital assets with at least $1 billion market value. ETC has added 184% this month, while scaling solution Polygon's MATIC and decentralized exchange Uniswap's UNI have gained 102% and 86% respectively, CoinDesk data show. Industry leader bitcoin (BTC) added 20% during the month, with ether up 60%. The total crypto market capitalization has rebounded to $1.14 trillion from last month's $762.82 billion low. The catalyst for ETC's gains has been Ethereum's impending "merge," a planned step to combine the Ethereum network's proof-of-work (PoW) blockchain with a proof-of-stake (PoS) blockchain called the Beacon Chain that has been running since 2020. "ETC is being driven by speculation that ETH miners will go to ETC and potentially, there could be another hard fork benefitting them," Lucas Outumuro, head of research at IntoTheBlock, said. ETC's July gain is consistent with a history of rallying around the time of major Ethereum upgrades. Full story here: Ethereum Classic Almost Triples, MATIC and UNI Surge as July Brings Relief to Crypto Market |
Omkar Godbole's Chart of The Day |
Bitcoin futures premium widens |
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Chart showing annualized rolling premium in three-month bitcoin futures listed on CME and Binance (Source: Skew) |
Bitcoin’s price rise this month has been accompanied by an uptick in the futures premium or the spread between prices in futures and spot markets. The annualized rolling premium in three-month bitcoin futures listed on the Chicago Mercantile Exchange, a proxy for institutional activity, has risen to 4.2% from near zero at the beginning of the month. While premium in three-month bitcoin futures listed on Binance has increased, it remains below that on the CME, a sign sentiment remains cautious on the retail-dominated offshore platforms. Perhaps that's a good sign for the market as retail-driven price rallies seldom have legs. |
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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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Biggest Gainers Biggest Losers |
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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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Join us for Converge22, Circle’s first annual crypto ecosystem conference, taking place September 27th-30th in San Francisco! Featuring wide-ranging demos and developer workshops, plus high-powered guest speakers including Aave’s Stani Kulechov, Compound’s Robert Leshner, Mary-Catherine Lader of Uniswap Labs, Anatoly Yakovenko of Solana, and dozens more. Register with code “Coindesk” for a discounted rate! Register today |
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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. Glen Goodman, crypto consultant, eToroAntonio Garcia Pascual, deputy chief, International Monetary FundBill Conner, president, SonicWall |
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Where innovators, changemakers, investors and leaders present their best ideas for investing in the future of the Web 3, digital assets, blockchain and crypto ecosystems. Register now. |
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Today's newsletter was edited and produced by Bradley Keoun. |
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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