  The latest moves in crypto markets, in context Edited by Omkar Godbole December 10, 2021 Sponsored by  Bitcoin (BTC) See the latest price here Ether (ETH) See the latest price here If you were forwarded this newsletter and would like to receive it, sign up here.
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Market Moves by Omkar Godbole Bitcoin and ether are nursing moderate losses as Europe's Stoxx 600 posts its third consecutive decline and S&P 500 futures gain 20 points, with investors awaiting the latest U.S. inflation reading.
The data due at 13:30 UTC is expected to show the cost of living in the world's largest economy increased at an annualized 6.8% in November, following October's 6.2% print.
The data is likely to inject volatility into the crypto market. That's what happened last month. Bitcoin, a perceived inflation hedge, rose over $3,000 to a record $68,990 on Nov. 10 after the October figure came in at a three-decade high. Prices tanked to $63,000 later in the day as money markets ramped up bets that the Fed would suck liquidity out of the financial system to contain inflation.
A somewhat similar action might unfold later Friday if the data beats estimates, paving the way for the Fed to accelerate the taper in December and forcing markets to price in a higher probability of an early interest-rate hike. As of now, money markets see a roughly 40% probability of the Fed raising rates by 25 basis points to a 0.25%-0.5% window in March 2022.
The continued uptick in the two-year Treasury yield, which is more sensitive to inflation expectations and rate-hike bets than the 10-year yield, suggests the market is pricing in faster Fed rate increases before the release. The two-year yield has risen to 0.73%, the highest since March 2020.
A weaker-than-expected report may provide some relief to asset prices, although it could be temporary. That’s because, according to ING, “inflation would need to drop quite sharply before the market can reasonably price out the Fed tightening cycle in 2022.”
According to some observers, a faster taper is a foregone conclusion. "Regardless of the precise details of today’s inflation report, the Federal Reserve is likely to announce at next week’s meeting it will accelerate its bond purchases to create space for it to move on rates, if necessary, before the middle of next year," Marc Chandler, chief market strategist at Bannockburn Global Forex, noted a blog post published early Friday.  Bitcoin’s vulnerability to rate-rise concerns likely stems from its appeal as an evolving technology. Historically, the cryptocurrency has closely tracked movements in tech stocks, which are sensitive to monetary policy tightening. Read the full story here: Bitcoin Under Pressure, Two-Year Treasury Yield Rises to 21-Month High as US Inflation Report Looms
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Technician's Take by Omkar Godbole  Lower Highs on Bitcoin  Bitcoin's daily chart (Source: TradingView)
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ICYMI In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:
"First Mover" hosts speak to CoinDesk Managing Editor for Global Policy & Regulation Nikhilesh De on the key takeaways from Wednesday's hearing where House Financial Services Committee members questioned crypto executives. Terraform Labs Co-founder and CEO Do Kwon is named top 10 of CoinDesk Most Influential this year. Kwon explains the plans for his company. Plus, market insights from Ava Labs President John Wu and the latest development from the Polygon network.
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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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