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| March 4, 2021 Everything you need to make sense of the crypto markets and beyond Sponsored By: By the CoinDesk Markets Team Edited by Lawrence Lewitinn If you were forwarded this newsletter and would like to receive it, sign up here. Bitcoin (BTC) -5.2% $49,326 Ether (ETH) -4.5% $1,562 (Price data as of Mar. 4 @12:40 UTC) Good morning. Here's what we're writing about: Market Moves by Omkar Godbole: Bitcoin Hovers Below $50K as Traders Await Fed's Take on Bond Yields Goldman Says Market Overpricing Odds of Fed Rate Hike, a Relief for Bitcoin BullsCheck out the CoinDesk TV show "First Mover," hosted by Christine Lee, Lawrence Lewitinn and Emily Parker, at 9 a.m. U.S. Eastern time. Today the show will feature guests: Charlie Shrem, investor and host of UntoldStories.com Daniel Lacalle, chief economist at Tressis U.S. Sen. Cynthia Lummis of Wyoming
MARKET MOVES by OMKAR GODBOLE Bitcoin Hovers Below $50K as Traders Await Fed's Take on Bond Yields Bitcoin's recovery appears to have stalled as caution sets in ahead of expected comments from Federal Reserve Chairman Jerome Powell later on Thursday.
The cryptocurrency is currently nursing losses below $50,000, having bounced from $43,000 to $52,500 in the past four trading days, according to CoinDesk 20 data.
A Q&A between Powell and the Wall Street Journal today will be closely watched by investors as it may influence risk sentiment in the financial markets and set the tone for the next big move in bitcoin. Specifically, what Powell says about bond yields will be of interest, trader and analyst Alex Kruger told CoinDesk.
According to ING analysts, "comments that [Powell] is monitoring events in the Treasury market might be enough to calm things down, encourage a return to a softer dollar."
That could bode well for bitcoin and stocks. Both assets have mostly moved in the opposite direction to the dollar index over the past 12 months, as seen below.
Bitcoin and S&P 500 inverse correlation with the dollar (Source: TradingView)
However, the rally in yields may accelerate, leading to a stronger dollar and weaker bitcoin, if Powell downplays concerns over rising bond yields, taking cues from his European Central Bank counterparts.
"No such concern [from Powell] would suggest the Fed is happy for Treasury yields to ‘find the right level’ – as our bond strategy colleagues say – potentially triggering another spike in yields and more dollar short-covering," ING analysts noted.
At press time, bitcoin is changing hands near $49,010 – down 5% over 24 hours. The 10-year U.S. yield is seen at 1.46%, and the dollar index is hovering above 91, representing a 0.2% gain on the day.
The 10-year yield surged to 12-month highs above 1.6% last week, as traders priced in prospects of an early unwinding of stimulus by the Fed. As such, both stocks and bitcoin faced selling pressure, with the latter falling 20%, the biggest single-week decline in nearly 12 months. Both asset types have benefitted from the Fed's massive stimulus delivered since the March 2020 crash.
According to Citi analysts, markets are now pricing in an 80% chance of a 25-basis-point Fed rate hike to 0.25% by December 2022. Until a few weeks ago, the first interest rate hike was expected to happen in 2024.
Dollar rallies
The Dollar Index has already broken out of a falling wedge pattern on the weekly chart, indicating the end of a year-long bearish trend and a reversal higher.
Dollar index weekly chart (Source: TradingView)
A rising dollar is one of the bigger headwinds for bitcoin's bullish trend, Kruger said. If the bullish pattern on the DXY is a guide, the market looks to be pricing in low odds of Powell talking down yields and triggering another risk-on rally in stocks and bitcoin.
--Omkar Godbole
Read the original story here:
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OMKAR GODBOLE Goldman Says Market Overpricing Odds of Fed Rate Hike, a Relief for Bitcoin Bulls Wall Street firm Goldman Sachs said Thursday that traders might be prematurely betting that the Federal Reserve will move quickly to unwind the past year's unprecedented monetary stimulus.
The investment banking giant's comments could offer relief to bitcoin bulls, some of whom argue that trillions of dollars of money printing by central banks raises the chances of inflation, bolstering the cryptocurrency's use as an investment hedge.
"The earliest the Fed will start talking about tapering [of bond purchases] is late 2021, with any discussion of interest rate hikes only coming a year after that," Goldman Sachs' Andrew Tilton told CNBC.
The market for futures contracts used to bet on Federal Reserve funds now implies that the first interest-rate hike could come as soon as 2022, versus the 2024 lift-off implied about four weeks ago. What's more, the futures are now pricing multiple rate hikes in 2023.
"That feels aggressive to us," Tilton said, adding that the Fed hasn't even begun tapering its ongoing $120 billion-a-month of bond purchases, a supplemental form of monetary easing once interest rates are cut close to zero, as they were early last year when the pandemic hit.
The Fed said earlier this year that it's committed to continue buying $120 billion worth of bonds per month until it sees "substantial further progress" in the recovery. The bank has also reiterated that interest rates would remain at record lows for some time after inflation rises above its 2% target.
A tapering or rate hike could dilute bitcoin's appeal as an inflation hedge, inviting some selling pressure from momentum funds who bought the cryptocurrency as a store-of-value asset. The cryptocurrency fell by 20% last week, the biggest single-week decline since March 2020, as U.S. Treasury bond yields rose, indicating that markets were pricing in prospects of an early Fed tightening. --Omkar Godbole Read the original story here: Goldman Says Market Overpricing Odds of Fed Rate Hike, a Relief for Bitcoin Bulls
BIGGEST MOVERS These are the biggest movers in the CoinDesk 20 over the past 24 hours:
Gainers: Cosmos (ATOM): +3.8% Kyber Network (KNC): +3.6% Losers: Cardano (ADA): -7.4% Chainlink (LINK): -6.6% Stellar (XLM): -5.8%
The CoinDesk 20 filters from the larger universe of thousands of cryptocurrencies and digital assets to define a core group of 20. These assets constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges.
LATEST HEADLINES BitMEX CEO Arthur Hayes May Surrender to US Law Enforcement Next Month Hayes would be allowed to continue living in Singapore under the agreement his counsel is currently negotiating with federal prosecutors.
Brave Acquires Tailcat to Create Private Search Engine Competitor to Google The move comes as privacy continues to grow in profile to become a real market advantage.
Half the Professionals Surveyed in Anonymous Poll ‘Trust’ Crypto The survey asked 1,800 respondents whether they “trusted” cryptocurrency and if they'd want to get paid in it.
SushiSwap, Fleeing Ethereum Fees, Is Now Live on Binance Smart Chain, Fantom, Others The move is one of the first concrete examples of the Uniswap clone going its own way.
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DAO Investing in NFTs Raises $1.3M From Crypto VCs Yield Guide Games will use the funds from Delphi Digital, Scalar Capital and others to invest in virtual land and other in-game assets. Kraken CEO Says He’d Only Want to Go Public at a Valuation Above $10B "We are certainly on track though $10 billion dollars is a low valuation," said Powell. "I wouldn't be interested in issuing shares at that price."
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Ripple’s Chris Larsen Files Motion to Dismiss SEC Case Over XRP Sales Larsen's lawyers say the SEC has failed to show he knowingly committed any wrongdoing. BitMEX Operator Appoints Former PwC Partner as Chief Financial Officer Stephan Lutz brings to the firm nearly a decade of experience as partner at auditing and consultancy giant PWC. Huobi Said to Be Launching Bitcoin, Ether Funds After Being Granted Hong Kong License The new license allows Huobi to advise on and manage securities investments.
ICYMI In case you missed it, here is yesterday's episode of First Mover: Bitcoin Retakes Key $50K Level; Michael Saylor on His Bitcoin Strategy MicroStrategy CEO Michael Saylor joins "First Mover" to discuss his company's aggressive bitcoin purchases and why he has spent over $2.1B to buy almost 91,000 BTC. Also, Charlie Lee talks about the future of his litecoin cryptocurrency and blockchain comes to the automotive industry. MOBI CEO Chris Ballinger on his project and partnerships with BMW, GM and Ford.
Introducing Coin Toss, debating the future of money on CoinDesk TV
From the world leader in crypto news and events, the all-new CoinDesk TV covers the rapidly evolving world of digital finance and its role in the global economy.
Hosted by CoinDesk Podcasts Managing Editor Adam B. Levine, Coin Toss sets the stage for debate between guests with opposing views on policy and regulation, privacy and data integrity, fraud and crime and more.
Watch Coin Toss Wednesdays at 10:30 a.m. ET on YouTube or CoinDesk.com.
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. ATTENTION: Scammers have been sending fraudulent emails with links to sites disguised to look like coindesk.com. If you are in doubt about a link, type https://www.coindesk.com directly into your browser; do not copy and paste. Remember, if something seems too good to be true, it probably is.
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