Bitcoin Climbs Back Above $19.5K Amid Fresh Fed Pullback Hopes

Prices: Bitcoin climbs above $19.5K on a good day for cryptos.

Insights: Binance’s plan to burn a small amount of LUNC’s bloated supply had no lasting impact on the hyperinflated token.

Prices

• Bitcoin (BTC): $19,566 +2.5%
• Ether (ETH): $1,322 +3.0%
• CoinDesk Market Index (CMI): $963 +2.6%
• S&P 500 Daily Close: 3,678.43 +2.6%
• Gold: $1,707 an ounce +2.7%
• 10-year Treasury yield daily close: 3.65% −0.2

Bitcoin, Ether and Gold prices are measured around 4:00 p.m. New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. For CoinDesk indices, visit coindesk.com/indices.

Bitcoin and Ether surge amid fresh Fed pullback hopes

By James Rubin

Crypto investors, who have taken a liking to bad economic news for the past few months, felt cheered up on Monday as the latest manufacturing indicators came in cooler than expected.

Bitcoin recently traded above $19,550, up more than 2% over the past 24 hours, amid a surprise monthly decline in the Institute for Supply Management’s Manufacturing Index, which measures factory activity. The decline did not send asset prices higher, but it did offer faint hope that the economy was slowing significantly, inflation would ease soon and the US Federal Reserve would be able to roll back its recent monetary policy strike. Markets have been desperate for signs of an improvement in the inflation struggle that Federal Reserve officials see as key to long-term economic stability.

Ether recently changed hands at just over $1,300, up about 3% from a day earlier at the same time. Most other major altcoins in market value traded higher, with ATOM and MATIC both up more than 5%. The CoinDesk Market Index (CMI), a broad market index that measures the performance of a basket of cryptocurrencies, rose over 2.5%.

Crypto prices, which have followed stocks for most of the year, continued the trend, with the tech-heavy Nasdaq, the S&P 500 and the Dow Jones Industrial Average (DJIA) up 2.3%, 2.6% and 2. up 7%. The gains followed a September of almost continuous falls as investors continued to worry about rising prices and the prospect of a deep recession.

Meanwhile, 10-year US Treasury yields declined and continued where they have been for the past few days, after climbing to 15-year highs late in the past few months. Yields and asset prices usually move in opposite directions. The decline could also reflect a surge in investor confidence that Fed policy is working.

Markets remained jittery on Credit Suisse as the investment banking giant tried to allay fears about its financial health, though the company’s share price ended up falling just about 1%. In Florida, the burden of Hurricane Ian continued to mount, although the cost of repairs and lost economic growth remain unclear.

In an email to CoinDesk, Jon Campagna, partner and head of trading and capital markets at crypto investment firm CoinFund, noted optimistically that bitcoin and cryptos in general struggled in September but averaged in the final quarter of the year their best performers have been quarterly returns of over 100%. “It remains to be seen whether history can repeat itself for the fourth quarter as it did for the month of September,” he wrote.

And Anastasia Amoroso, chief investment strategist at financial technology firm iCapital, told CoinDesk TV’s first mover program that Bitcoin’s price is “much closer to bottoming than we are, although she added that Bitcoin’s range of $19,000 to $20,000 is likely.” won’t escape it’s occupied “until and until the Fed does a nudge.”

“Unfortunately, until then, I think we’ll still be held at this current level,” she said.

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insights

Binance’s failed plan to increase the price of Luna Classic

By Krisztian Sandor

Crypto exchange Binance’s planned burn of Luna Classic (LUNC) — the holdover cryptocurrency of failed blockchain project Terra before its restart — should boost the price. At least that was the speculation of many crypto traders.

But the effect proved overwhelming.

Since the mechanism was implemented a week ago, Binance has destroyed $1.8 million worth of LUNC — “burned” in crypto terms, or a reduction in pending supply — based on a Monday tweet from Binance CEO Changpeng “ CZ” Zhao. This amount accounts for just 0.08% of the token’s total supply, too tiny to have a measurable impact on the tokens’ hyperinflated supply.

The price of LUNC has fallen 12% to $0.0003037 in the past 24 hours, according to cryptocurrency price tracker CoinGecko.

LUNC is the native token of the Terra Classic blockchain, which imploded this May and wiped out $60 billion in market value; The project’s algorithmic stablecoin lost its peg to the dollar, and LUNC, the token intended to be its stabilizer, went into hyperinflation. While most crypto developers and projects are exiting the blockchain, some community members attempted to breathe new life into the network by adopting a scheme that reduces the bloated supply of tokens.

LUNC almost doubled its price last week after Binance, the world’s largest crypto exchange by trading volume, unveiled its own supply-reduction program, CoinDesk reported last week. The crypto exchange has implemented a mechanism that destroys the same amount of coins as the fees it collects by trading on LUNC.

According to data from CoinMarketCap, LUNC became the third most traded asset on Binance by trading volume after Bitcoin (BTC) and Ether (ETH).

The burn was calculated based on the trading volume of the token between September 21st and October 1st. According to blockchain data, Binance took 5.6 billion tokens out of circulation by sending them to a “burn” address.

Given that there are more than 6.8 trillion tokens in circulation, the burn rate amounts to a meager 0.08% of the total supply – extrapolated to just a few percentage points reduction on an annualized basis.

Binance’s scheme “is meaningless in its direct implications,” a crypto trader known by the alias Ogle told CoinDesk in a Telegram chat.

“At this rate, and assuming volume continues at current levels (which I doubt), it would take 15 years to reach the overall burn target.”

Important events

MetaBeat Conference (San Francisco)

11:30 am HKT/SGT (3:30 am UTC): Reserve Bank of Australia interest statement

9 a.m. H1HKT/SGT (1 p.m. UTC): Speech by Federal Reserve Bank of New York President John C. Williams