Ether-Bitcoin Ratio Rallies, China Cuts Rates

The latest moves in crypto markets, in context

Edited by Omkar Godbole

December 6, 2021

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

Market Moves: ETH/BTC Rallies, China Cuts Rates

Technician's Take: TRX Holds Key Support

Be on the lookout for the following events today:

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.

– Omkar

Market Moves

by Omkar Godbole

The crypto market remains in a risk-off mode after Saturday's crash, which saw bitcoin falling as low as $42,400 on some exchanges. The BTC/USDC pair trading on Huobi Global crashed to $28,801. The crash liquidated derivative positions worth more than $2.5 billion.

The slide happened in the wake of the Fed's hawkish turn and debt-ridden Chinese property developer Evergrande warning of default late Friday.

“We expect that cryptocurrencies will continue to be driven by the appetite for risk in other markets,” said Matthew Dibb, COO and co-founder of Stack Funds. “New COVID variant concerns, as well as tapering, have been a major concern here, and we see this being a predominant theme for the remainder of Q4.”

The People's Bank of China (PBOC) said early Monday it freed up 1.2 trillion yuan ($190 billion) for banks to lend by reducing the reserve requirement ratio in a bid to calm Evergrande jitters. While the move seems to have calmed nerves in traditional markets, it is yet to lift spirits in the crypto markets.

ETH/BTC Rally

While bitcoin tanked last week, pulling the broader crypto market lower, there was one bright spot. The ether-bitcoin (ETH/BTC) ratio rose 13%, reaching a 3.5-year high and registering its best weekly performance since May.

The move was unique. Historically the pair has rallied during market-wide bull runs characterized by buying frenzy in ETH and other alternative cryptocurrencies.

Several factors, including the Ethereum blockchain’s EIP-1559 upgrade implemented in August, appear to have helped ETH/BTC chalk out gains in a risk-off environment.

“One of bitcoin’s main value propositions over ETH has been its monetary policy. However, after the London upgrade (and specifically EIP-1559), many perceive ETH as having a sounder monetary policy,” Alex Svanevik, CEO of blockchain data company Nansen, told CoinDesk in a Telegram chat.

Bitcoin's declining role as a funding currency may be another reason for ETH/BTC's outperformance.

"Stablecoin tether's volume (as quote asset) are 10x bigger than BTC volume as quote asset," Clara Medalie, research lead at Kaiko, told CoinDesk in a WhatsApp chat.

That’s a change compared with pre-2020, when bitcoin served as a gateway to altcoins. So the unwinding of long altcoin trades now puts a bid under stablecoins. Previously, it would bring demand for bitcoin, helping the cryptocurrency outperform other coins.

Also read:

3 Reasons the Ether-Bitcoin Ratio Rose to 3 1/2-Year Highs as Crypto Crashed

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Biggest Movers

These are the biggest movers in the CoinDesk 20 over the past 24 hours:

Top Gainers:

There are no winners today in CoinDesk 20.

Top Losers:

Chainlink (LINK): -9%

Stellar (XLM): -7.5%

The CoinDesk 20 are 20 digital assets filtered from the larger universe of thousands of cryptocurrencies and constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges.

Technician's Take

by Omkar Godbole

Tron's TRX Token Flirting With Long-Held Support

TRX's weekly chart (Source: TradingView)

TRX is holding the 50-week moving average support after three straight weekly declines.

Continued defense of the critical support may bring an oversold bounce.

The average acted as a floor in June and July.

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ICYMI

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

US Job Growth Disappoints in November While Omicron COVID Variant Now Detected in 5 States, Messari CEO Reflects on the Year in Crypto and More

"First Mover" hosts speak to Messari CEO Ryan Selkis for his view on the crypto space in the year 2021 as well as the outlook for 2022 as his firm has just released its annual crypto theses. Bitcoin is range-bound. Horizon Fintex President Mark Elenowitz shares his market insights. Plus, what's the Indian government's plan with crypto regulation, and how does that impact its own CBDC rollout? WazirX CEO Nischal Shetty shares his take.

Latest Headlines

Conditions like what we had over the past few weeks usually set the stage for a big move in one direction or the other.

Right now, it’s a money game. One day it could be the backbone of all of DeFi.

The fund will invest in gaming projects built on Binance Smart Chain.

BitMart CEO Says Stolen Private Key Behind $196M Hack

The exchange’s CEO said they will compensate affected users with their own funds.

The SEC-registered investment adviser plans to offer curated, risk-adjusted crypto portfolios to its customers in early 2022.

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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