First Mover: Markets Shake This Tethered Coil and Get Squared Away

February 24, 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)

+3.9% $50,725

Ether (ETH)

+7.1% $1,690

(Price data as of Feb. 24 @12:57 UTC)

Good morning. Here's what we're writing about:

Omkar Godbole: Bitcoin Retakes $50K as Powell Eases Market Jitters, Bond Yields Drop

Check 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:

MARKET MOVES

Tether (USDT) rescued the crypto market Tuesday, albeit not the way its detractors have accused it in the past.

Bitcoin staved off further losses on news that the stablecoin’s issuer and the New York Attorney General finally came to a settlement. Tuesday morning, bitcoin was struggling to keep itself in the low $46,000 range. From its Sunday highs, it lost 20% over the course of two days, its worst 48-hour performance since March 2020.

That changed when the NYAG announced the agreement. Immediately after, prices on the world’s oldest cryptocurrency shot up above $49,000.

Bitcoin prices, Feb. 23 to Feb. 24, 2021. (CoinDesk)

So why the fuss over a stablecoin?

Tether is a crucial part of the crypto markets. Nearly 45% of bitcoin traded on exchanges is done against USDT, according to data site CryptoCompare. For many in Asia, tether is the on-ramp to get into crypto trading. Thus having more certainty about it would mean more certainty about the price of bitcoin and other cryptocurrencies so heavily dependent on tether for liquidity.

As part of the deal, Tether agreed to quarterly disclosures of its cash and equivalents in reserve over the next two years. Critics often cite Tether’s opacity as a reason to worry about it. Indeed, in a statement following the settlement, NYAG Letitia James said, “Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie.”

The Tether settlement didn’t keep prices up for long. Near the end of the U.S. equity markets close, it was again testing support in the $45,000 range at around 20:00 UTC (3:00 p.m. ET). However, it once against rallied on another bit of news.

Square (NYSE: SQ) released its 10-K showing that its bitcoin revenue was up an astonishing amount and it also bought $170 million worth of BTC in February. At $4.57 billion, Square’s bitcoin revenue is a 785% jump from $516 million the year before and represents 48% of the company’s entire revenue.

Bitcoin has been trading between $50,000 and $51,000 since 2:00 UTC Wednesday (9:00 p.m. Tuesday ET).

Meanwhile, ether has been trading in tandem with bitcoin. For the past several hours, the world’s second largest cryptocurrency by market cap has stayed in a range between $1,600 and $1,700, a relief to those who saw it change hands as low as $1,361 the day before. Yet not all has been rosy for ether.

Ether prices, Feb. 23 to Feb. 24, 2021. (CoinDesk)

Some $115 million in loans were liquidated on decentralized finance (DeFi) platforms Tuesday. That happened before the subsequent rally, when prices were hovering around the $1,400 mark. Most of those liquidations — $86 million — were on Compound Finance’s platform alone.

What’s more, the value of assets locked in DeFi is down slightly to $38.9 billion, according to DeFi Pulse. On Monday, it was as high as $42.84 billion. Yet it’s important to keep it in perspective: A the start of the year, “only” $15.5 billion in value was locked and it crossed the $1 billion threshold only a few months before that.

Traders pay attention to DeFi because so much of it is built on Ethereum.

--Lawrence Lewitinn

SPONSORED BY NEXO

Your digital assets deserve a savings account in their BEST INTEREST. Leading crypto lender Nexo treats you, your crypto and your fiat to industry-best Crypto & Fiat services, featuring:

* Up to 12% interest on digital assets, paid out daily!

* Yields available on BTC, ETH, LTC, BCH, XRP, XLM, EOS, TRX, LINK, BNB, PAXG, USDT, USDC, TUSD, PAX, DAI, HUSD, GBP and EUR.

* No minimum or maximum limits on funds deposited, offering infinite opportunities to earn.

* Full flexibility with no lock-in periods, so you can withdraw your funds anytime.

* #ZeroFees on all transactions.

* Military-grade wallet security and top-tier insurance on all custodial assets with SOC 2 Type 2 certified crypto custodian BitGo.

Get started at nexo.io

OMKAR GODBOLE

Bitcoin's euphoric derivatives market has cooled, weakening the case for an extended price pullback.

The perpetual futures funding rate, or the average cost of holding long positions on major exchanges, has declined to 0.02%, having surged to a multi-month high of 0.13% earlier this month.

Bitcoin perpetual futuers funding rates prices (Source: Glassnode)

According to Arcane Research, the market seems healthier with funding rates back to normal levels. Patrick Heusser, head of trading at Crypto Finance AG, foresees price consolidation. "The decline in the funding rate will tame the selling pressure," Patrick said. "I am looking for consolidation between $45,000 to $50,000.”

--Omkar Godbole

See Omkar Godbole's report today: Bitcoin Retakes $50K as Powell Eases Market Jitters, Bond Yields Drop

BIGGEST MOVERS

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

Gainers:

None of the CoinDesk 20 constituent digital assets were down relative to where they were 24 hours ago.

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.

BOLO

Be on the lookout for these events today:

21:00 UTC (4:00 p.m. ET): Chipmaker NVDIA (NASDAQ: NVDA) reports Q4 earnings. What to look for: Revenues are expected to come in at $4.8 billion and EPS is forecasted to be $2.81. Its chips have been in short supply thanks as surging crypto prices make mining more lucrative.

FIRST MOVER TV SHOW HIGHTLIGHTS

Paxos Plans to File for a Clearing Firm License

CEO Charles Cascarilla said the crypto firm, which already settles equities trades, hopes to apply for a clearing firm license soon.

LATEST HEADLINES

India’s Central Bank Chief Airs ‘Major Concerns’ About Crypto Risks

Reserve Bank of India Governor Shaktikanta Das said the he expects the government to "take a call" on cryptocurrencies.

Swiss Private Bank Bordier & Cie Launches Crypto Trading for Clients

Bordier & Cie clients will be able to buy, hold and trade digital assets such as bitcoin, ether, bitcoin cash and tezos.

CoinShares Launches Physically Backed Ethereum ETP With $75M in AUM

This is the firm’s second such product after its "BITC" bitcoin ETP was listed on the SIX exchange in January.

Alameda Leads $40M Round in ‘DeFi Prime Brokerage,’ Plans Maps.me Integration

The firm’s earlier investment in a travel app starts making sense.

Introducing First Mover, live daily 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.

We cut through the hyperbole and confusion to explain what’s happening in this fast-changing industry and why it matters to investors, companies and governments.

First Mover, CoinDesk TV’s flagship show, gives investors the top global market, business and regulatory news stories impacting digital assets. Hosted by CoinDesk's Christine Lee, Lawrence Lewitinn and Emily Parker, the programming features daily dispatches from reporters and partners around the world and high-profile guests including top newsmakers, influencers, analysts, traders and trend watchers at crypto exchanges.

Watch First Mover every weekday at 9 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.

First Mover

A newsletter from CoinDesk

See Previous Editions

Copyright © 2021 CoinDesk, All rights reserved.

250 Park Avenue South New York, NY 10003, USA

You can manage your preferences here or unsubscribe from all CoinDesk email.