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| The latest moves in crypto markets, in context Edited by Omkar Godbole January 5, 2022 Sponsored by If you were forwarded this newsletter and would like to receive it, sign up here.
Good morning, and welcome to First Mover. Here's what's happening this morning: Market Moves: Bitcoin changes hands around $46,300 while traders await release of minutes from Federal Reserve's December meeting, potentially offering clues for the U.S. central bank's strategy for tamping down fast-rising inflation. PLUS: "Paper hands ratio" for bitcoin suggests individual crypto traders have capitulated, a historically bullish signal. Technician's Take: Price chart for Dfinity's ICP token suggests bullish breakout.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: Marco Di Maggio, professor of business administration, Harvard Business School Seth Ginns, managing partner and head of liquid investments, CoinFundBlockbusterDAO founder (anonymous)
Market Moves Bitcoin's daily price chart shows the cryptocurrency's price holding range support. (TradingView) Bitcoin (BTC) held critical support even as traditional risk assets dipped amid improved prospects of an early rate hike by the U.S. Federal Reserve.
Crypto traders are monitoring the developments along with the planned release Wednesday of the minutes from the central bank's December meeting – for clues on officials' plans for attacking fast-rising inflation. A growing number of investors see bitcoin as a possible hedge against rising prices.
The top cryptocurrency by market value rose 1% to $46,300, ensuring a continued squeeze in a four-week trading range of $45,400-$52,100. On Tuesday, the lower end of the trading range came into play, but sellers failed to push through the long-held support.
Asian stocks dipped along with the S&P 500 futures and tech-heavy Nasdaq futures. Gold posted marginal gains while copper and other growth-sensitive industrial metals faced losses. The anti-risk currencies like the U.S. dollar, Swiss franc and Japanese yen traded flat to positive, according to Investing.com. The CME's FedWatch Tool now shows a 58% probability that the Fed will hike rates by March, the first increase since late 2018. (CME) According to the CME Group’s FedWatch Tool, investors were pricing a 58% probability of the Federal Reserve raising the benchmark U.S. interest rate by 25 basis points (0.25 percentage point) in March.
That’s a significant increase from the 26% probability a month ago. The central bank last month signaled three rate hikes for 2022, along with the end of its liquidity-boosting asset purchasing program in March.
Officials led by Federal Reserve Chair Jerome Powell assured markets then of a gradual pace of policy tightening. However, a continued rise in the March rate hike probability might mean faster tightening – four rate hikes, each delivered at quarterly meetings.
“If the Fed goes to four hikes next year, that is a big statement," John Turek, author of the Cheap Convexity blog, said in a blogpost published Dec. 29. "That means either two things. First, they are hiking in March, which would be no gap between the end of QE and the first hike. Not impossible, but that is a big statement about intent.”
“If they don’t go in March and want to go four times next year, that means they will be hiking at a rate faster than quarterly, which is not something they have done in over a decade," Turek wrote. Read More: Bitcoin Holds Support Ahead of Fed Minutes, March Rate Hike Probability Rises
'Paper Hands Ratio' From Blockchain Analysis Suggests Bitcoin May Squeeze Higher According to some analysts, whenever the "paper hands" ratio falls below 25%, it signals capitulation selling by individual crypto traders. (GlobalBlock/Glassnode) Bitcoin could be in for a recovery rally, as retail interest declines, analysts told CoinDesk.
“Whilst bitcoin remains flat in the short term, on-chain metrics like the paper hands ratio from Glassnode suggest a bottom could be nearing,” Marcus Sotiriou, analyst at the UK based digital asset broker GlobalBlock, told CoinDesk in an email.
The BTC paper hands ratio is the ratio of young coins active in the last six months to the cryptocurrency’s circulating supply. A high reading represents greed among retail or short-term traders, while a low number signals retail disinterest.
Retail investors are often referred to as having paper hands – weak capacity or desire to hold an asset for a long time – and are usually the last to enter the bull run and exit the bear run. Hence, declining retail activity is considered a contrary indicator – a hint of an impending reversal higher. Read More: Bitcoin May Squeeze Higher As Retail Interest Subsides: Analyst
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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.
Technician's Take by Omkar Godbole Dfinity's internet computer (ICP) token sets up bullish crossover The falling wedge breakout, a bullish reversal pattern, seen on ICP's daily chart points to scope for a notable rally, subject to broader market stability.
ICP is the utility token allowing holders to participate in and govern the Internet Computer blockchain network. ICP's daily chart showing a bullish breakout (Source: TradingView)
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Introducing CoinDesk's new Digital Asset Classification Standard, which was created in response to the significant growth of the number and types of digital assets offered in the market and the realization that traditional classification standards used for equities and other asset classes could not be adapted accurately to classify digital assets. Read more about DACS.
ICYMI In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:
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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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