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Good morning, and welcome to First Mover. I'm Brad Keoun, here to take you through the latest in crypto markets, news and insights. (Lyllah Ledesma is at the NEAR protocol's conference in Lisbon.) In today’s newsletter: - Price Point: Bitcoin rose to its highest in three weeks during Asia trading hours, but the sell-off was swift after the U.S. Consumer Price Index for August came in hotter than expected. As of press time the price was back below $22K.
- Market Moves: Investment banks are predicting a quick reversal of the dollar's recent slide. That could be bad for bitcoin, Omkar Godbole writes.
- Chart of the Day: The dollar value locked in the open perpetual futures contracts tied to ethereum classic (ETC) has tripled to over $300 million in two months.
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By Omkar Godbole and Bradley Keoun |
The leading cryptocurrency rose to $22,600 during Asian trading hours, marking its highest price since Aug. 19 and representing a 21% gain in seven days, according to CoinDesk data. But – the cheery mood was quickly dashed at 8:30 am ET (12:30 pm UTC) when the U.S. Labor Department released its monthly inflation report showing that the Consumer Price Index rose 8.3% in August – a deceleration from July's 8.5% pace but still hotter than the 8.1% forecast by economists. Bitcoin quickly tumbled below $22,000, dropping about 5.4% in sync with a big drop in U.S. stock futures. JUST IN (from Helene Braun): US Inflation Higher Than Expected in August, Bitcoin Dips 4% In other news, Hodlonaut, a pseudonymous bitcoiner who edits Bitcoin magazine Citadel21, filed a lawsuit against self-proclaimed bitcoin inventor Craig S. Wright. Hodlonaut began tweeting in 2019 that Wright isn't the pseudonymous creator of bitcoin, Satoshi Nakamoto. And now, the Norwegian court will decide whether Hodlonaut's tweets hold water under domestic law. According to CoinDesk, Hodlonaut's supporters are worried that Wright's legal action might scare developers, journalists or institutions away from working on the leading digital cryptocurrency. Elsewhere, Starbucks said it will allow customers to purchase and earn digital collectibles in a new Polygon-powered rewards program, Starbucks Odyssey. Customers can now join a waitlist to gain access to Starbucks Odyssey, after which, members can go on "journeys" aimed at community building and customer engagement. |
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Bitcoin Hits 3-Week High on Dollar Weakness, But TradFi Firms Retain Bullish Bias on Greenback |
Bitcoin tends to move in the opposite direction of whatever the U.S. dollar is doing in foreign exchange markets. Early Tuesday, BTC jumped to a three-week high, tracking continued weakness in the U.S. Dollar Index (DXY). "We see the current market moves to be largely driven by the pullback in the dollar index as well as position unwinds ahead of the Ethereum Merge," Dick Lo, the founder and CEO of quant-driven trading firm TDX Strategies, said. It may be too early for BTC devotees to throw caution to the wind; some investment banks expect the greenback to regain its mojo soon. The index, which tracks the greenback's value against major fiat currencies, peaked above 110 last week as the European Central Bank rate hike put a floor under the euro, and inflation expectations fell, offering relief to risky assets, including bitcoin. As of press time, the index was trading lower at around 108. The dollar's pullback, however, could be fleeting, according to Chris Turner, global head of markets at ING. "With the Fed expected to hike another 75 basis points next week and introduce new quarterly projections, we doubt much momentum will be behind a dollar correction," Turner wrote in Monday's edition of ING's foreign-exchange market update. "We would be favoring a move back above 110.00 next week." |
Dollar index extends four-day losing trend. (TradingView/CoinDesk) |
Multinational investment bank UBS (UBS) expects the dollar to remain well supported in the near term. "We think investors should brace for continued dollar strength over coming months," the bank's strategists led by Mark Haefele, chief investment officer of global wealth management, wrote in a client note published on Sept. 9. The team said the combination of a weaker growth outlook for the Eurozone and China and relatively robust U.S. economic data is likely to keep the DXY in demand. Read the full story here. |
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Risk Assets Likely to bottom After First Fed Rate Cut, Past Data Shows |
Chart showing an influx of money in the ETC futures market. (Kaiko) |
The dollar value locked in the open perpetual futures contracts tied to ethereum classic (ETC) has tripled to over $300 million in two months. “Its a clear sign that traders are searching for any and all trading opportunities ahead of the Merge,” Paris-based Kaiko Research said. The influx of capital could also be related to Ethereum miners switching to the Ethereum Classic blockchain, which uses a proof-of-work consensus mechanism to validate transactions. According to Kaiko: “Miners could be hedging using perpetual futures.” Ethereum’s Merge, due later this week, will combine the current proof-of-work (PoW) chain with the proof-of-stake Beacon Chain that went live in December 2020, rendering miners who are now operating on the PoW chain workless. |
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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 Market Index is a broad-market index of digital assets, weighted by market capitalization. A full description of the methodology is here. |
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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. - Raghu Yarlagadda, co-founder and CEO, FalconX
- Carlos Domingo, founder and CEO, Securitize
- Raj Gokal, CEO, Solana Labs
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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. |
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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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