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

Market Moves: Ether-bitcoin implied volatility spread suggests investors are focused on macro factors. Bitcoin shorts surge on Bitfinex.
Featured stories: U.S. yield curve signals recession.

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:

David Gan, founder and general partner, OP Crypto
Pavel Kravchenko, co-founder, Distributed Lab

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

Major cryptocurrencies traded in familiar price ranges while traditional risk assets picked up a bid early Friday after Russian President Vladimir Putin reportedly said there were some "positive shifts" in talks between Russia and Ukraine.

While bitcoin bounced 1.3% to nearly $40,000, it remained locked in a six-week triangle pattern identified by Jan. 24 and Feb. 24 lows and Feb. 10 and March 2 highs. Ether, the second-largest cryptocurrency, also traded similarly.

The spread between the six-month ether and bitcoin implied volatilities fell to a two-year low of 13%, perhaps indicating that the cryptocurrencies' fortunes are more strongly tied to each other than before. Implied volatility refers to investors' expectations for price turbulence over a specific period.

Ether-bitcoin six-month implied volatility spread (Source: Skew)

Perhaps, the common force driving the two could be the next week's Federal Reserve meeting. The central bank is expected to lift borrowing costs by 25 basis points and offer more clues on when and how it plans to shrink its balance sheet.

The long-short ratio on Bitfinex, one of the top 10 crypto exchanges by trading volumes, tanked nearly 70% to the lowest since July 2021, as the number of bearish bets surged.

Some investors took it as a warning of an impending drop, while others anticipated a potential short squeeze that would send bitcoin higher.

Bitcoin's long-short ratio on Bitfinex (Source: TradingView)

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The U.S. Treasury yield curve has collapsed, with the spread between yields on 10-year and two-year notes sliding to a two-year low and just 26 basis points short of inversion – a recession signal.

A curve inversion is when short-term borrowing costs rise above long-term borrowing costs.

In a note published Thursday, Goldman Sachs warned of a U.S. recession next year, putting the probability at 35%, according to Bloomberg. Further, the investment bank downgraded their growth forecast for 2022, citing soaring oil prices and economic fallout from the ongoing Russia-Ukraine military conflict.

Recession fears may bode well for assets with a safe-haven appeal. While bitcoin's link with the real economic activity is still relatively weak, the cryptocurrency tends to move or less in tandem with risk assets, mainly high-beta stocks, as discussed in Tuesday's First Mover edition.

U.S. Treasury yield curve, or spread between the 10- and two-year yields (Source: TradingView)

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

Expanding Role of Crypto in Russia-Ukraine Conflict, Inflation Hits a New 4-Decade High, Bitcoin Price Analysis and More

A financial war is being waged across the globe, sending currency and commodities markets into volatility akin to the crypto markets. "First Mover" hosts speak to Uriel Epshtein of Renew Democracy Initiative for his analysis on the global sanctions against Russia. Alex Siman of SubSocial Network shares insights on their and Gavin Wood's fundraising effort to aid Ukraine. Crypto markets analysis from 3iQ Digital Assets President Chris Matta. Plus, expanding access to bitcoin for the masses, Patrick Sells of NYDIG and Tom Novak of Visions Federal Credit Union explain their latest initiative.

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.