Crypto Markets Fall Further With Whale Demand Elusive

The latest moves in crypto markets, in context

January 24, 2022

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Good morning, and welcome to First Mover. Here's what's happening this morning:

Market Moves: Bitcoin slides toward $33K as whales stay on the sidelines; Tantra Labs Liquidates; Tantra Labs Liquidates

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. Today's show will feature guests:

Today's newsletter was edited by Omkar Godbole and produced by Parikshit Mishra.

Market Moves

Bitcoin, ether and the broader crypto market faced another wave of selling during Monday's European hours as U.S. stock index futures erased early gains, signaling an extension of last week's risk declines.

The latest round of sell-off comes after Goldman Sachs predicted a faster pace of Fed tightening if inflation continues to rise. The heightened geopolitical tensions between U.S. and Russia could be adding to bearish pressures around risk assets, in general.

“We see a risk that the [Federal Open Market Committee] will want to take some tightening action at every meeting until the inflation picture changes,” Goldman economist David Mericle noted in Saturday's client note, according to CNBC.

The investment bank has penciled in four quarter-percentage-point rate hikes for this year. Fed fund futures are priced for nearly five rate increases. Most commentators have tipped the first increase in borrowing rates in March followed by three more at subsequent quarterly meetings.

The ultra-hawkish expectations perhaps leave the door open for a relief rally if the central bank disappoints market expectations later this week by sticking to its December projection of three rate hikes in 2022.

The Fed’s January policy meeting is due to start on Tuesday and the statement and interest rate projections will be published on Wednesday at 19:00 UTC.

Whale demand elusive

While bitcoin's slide appears overdone on technical charts, demand from whales or large crypto investors remains elusive, signaling a low probability of a quick trend reversal higher.

The cryptocurrency's 14-day relative strength index (RSI), a popular momentum indicator, has dipped under 30, supposedly hitting lifetime lows and representing oversold conditions.

"Daily RSI at all-time lows doesn't mean that bitcoin has bottomed out. In our opinion, a good consolidation phase is required to build confidence for investors to re-enter the markets," Lennard Neo, head of research at Stack Funds, told CoinDesk in a WhatsApp chat.

Crypto traders often read overbought/oversold RSI readings with blockchain metrics like whale demand, derivatives market data and macro factors.

As of writing, there were no signs of renewed buying by large investors, with supply held by entities owning at least 1,000 BTC stagnant, having decoupled from rising prices in late September.

The late September divergence between whale holdings and rising prices was perhaps an advance indicator of a crash observed over two months. We saw a similar divergence heading into the May 2021 crash.

Crypto trader liquidates

Tantra Labs, a cryptocurrency-focused trading firm that offered an interest-bearing investment product, is being wound down after reporting "performance degradation" partly due to a closely watched markets gauge GBTC discount failing to raise fresh capital.

The Grayscale Bitcoin Trust, or GBTC, is the world's largest cryptocurrency fund, and it trades as a stock. Due to a variety of factors the share price recently has been trading at a record discount of 28% to the value of the underlying bitcoin in the fund.

As recently as early 2021, the share price traded at a premium, but it tilted negative in February of last year and has been on a steady decline since, leaving GBTC holders that acquired shares at NAV a year ago in loss. (Grayscale is a unit of Digital Currency Group, which also owns CoinDesk.)

Read the full story here: Crypto Trader Tantra to Liquidate After 'GBTC Discount' Widens to Record

A Message from Grayscale

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Crypto Prices

Bitcoin (BTC)

See the latest price here

Ether (ETH)

See the latest price here

The following are the biggest movers in the CoinDesk 20 digital assets over the past 24 hours:

Biggest Gainers:

Biggest Losers:

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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Latest Headlines

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“New Money” explores what it means to be part of the new “creator economy.” We hear from pro athletes, celebrities and social media influencers who are on the cutting edge of interacting directly with fans and developing new ways to generate revenue from their own celebrity. Tune in every Wednesday at 1 p.m. ET.

Technician's Take

By Omkar Godbole

Bitcoin's daily UTC close pivotal

Bitcoin's daily chart (Source: TradingView)

Bitcoin is fast nearing support at $30,000, which, if breached, may cause significant damage.

The cryptocurrency built a base around that level in the late second quarter of last year and hit new record highs in November.

ICYMI

In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:

Bitcoin Drifting Below $40K, Fed Releases White Paper on Central Bank Digital Currency, SEC Chair Gary Gensler Wants More Control of Crypto

"First Mover" hosts are joined by Congressman Tom Emmer (R-MN) as he introduces a new bill aimed to limit the Federal Reserve's ability to issue a digital currency. This comes as the Fed has just released a long-awaited white paper on the digital dollar. Bitcoin crashes to a five-month low. Managing Director of MarketGauge Group Michele Schneider provides her analysis. Plus, former SEC Commissioner and Patomak Global Partners CEO Paul Atkins gives his take on the latest regulatory signal from SEC Chair Gary Gensler.

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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