Good morning Here’s what happens:
Prices: Bitcoin surges above $23,000 for the third time in four days. Other major cryptos are mostly in the red.
Takeaways: Despite Bitcoin’s recent surge, a number of analysts are cautious about the way forward.
CoinDesk Market Index (CMI)
−44.1 ▼ 4.0%
−453.4 ▼ 2.0%
−92.5 ▼ 5.7%
S&P 500 daily close
−2.9 ▼ 0.1%
−0.2 ▼ 0.0%
Treasury yield 10 years
BTC/ETH prices per CoinDesk indices; Gold is the COMEX spot price. Prices from approximately 4:00 p.m. ET
Bitcoin tests $23.1k before retreating
By James Rubin
Bitcoin surged above $23,000 for the third time in four days before falling back as markets continued their hopeful watch of improving macroeconomic conditions.
So far this week, nothing has offset the recent narrative of falling inflation, slightly slowing economic growth and a US Federal Reserve poised to hike interest rates at a more moderate pace than 2022.
BTC recently traded at around $22,600, down 2% over the past 24 hours, although the largest cryptocurrency by market cap is still up more than 30% this year.
In an interview with CoinDesk “First Mover” TV, Matt Weller, global head of research for FOREX.com, said the recent rally was driven by market dynamics, including the liquidation of “a large short position.” Weller said he’s now seeing “a small portion of this FOMO from traders who thought they had all year to buy near the bottoms.”
“Now that prices are going up, we’re seeing a lot of these traders throw in the towel and just jump in to make sure they don’t see missing out on the big bounce from the bottom that we have now,” he said. Ether fared less well, falling below $1,550 for the first time in a week. The second largest cryptocurrency by market value lost 5.7% from Monday at the same time. Other major cryptos fell later in the day to trade well in the red, with popular meme coins DOGE and SHIB down more than 7% and 8%, respectively, and ADA down 8%. The CoinDesk Market Index (CDI), an index that measures the performance of cryptos, is down about 4% recently.
The story goes on
Stock indexes traded sideways on Tuesday, with the tech-heavy Nasdaq and S&P 500 slipping a few fractions of a percentage point as investors chewed on recent gains, a mix of the decent (General Electric) and the lower (3M and Microsoft).
Crypto news has also had its ups and downs, with analysts at JPMorgan noting an uptick in crypto exchange Coinbase’s trading this year, even as peers’ volume has fallen. And a unit of Genesis Global Capital, the crypto lender that filed for bankruptcy protection in New York last week, claimed that longtime blockchain industry veteran and Bitcoin Cash supporter Roger Ver — sometimes dubbed “Bitcoin Jesus” due to his early evangelism denoted – for the industry – could not handle cryptocurrency options trading.
The allegation against Ver by GGC International Limited was contained in a January 23 filing with the New York State Supreme Court in Manhattan. Genesis is a subsidiary of Digital Currency Group (DCG), a crypto conglomerate that also owns CoinDesk.
Meanwhile, FOREX.com’s Weller said that institutions, not investors, are behind this year’s crypto price surge.
“I don’t think there are these compelling new use cases that are pushing retail back into the market,” Weller said. It seems the only people left on the retail side are those who have been through multiple cycles and understand how volatile this market can be.”
He added: “Remember these institutions move so slowly and they have to go through a panel and put together a convincing case and get approval to gradually increase their allocations. And these decisions are not made lightly. Many of these processes started back in 2020, 2021. They are still ongoing and give institutions the opportunity to buy cheap bitcoins for example or [ether]. That really gave the market a bottom and could continue to support prices later this year and beyond.”
There are no winners in CoinDesk 20 today.
Which way does bitcoin go from here?
By James Rubin
Is Bitcoin’s rise in 2023 a harbinger of more good days, or a temporary rebound from a 14-month bear market that has shaken the public’s already shaky confidence in crypto?
Analysts commenting on CoinDesk this week have been largely skeptical about the near-term outlook, although they have hovered around $23,000 for much of the past four days. Even with a late Tuesday drop, Bitcoin’s price is up more than 30% this year.
Analyst caution underscores the ongoing fragility of crypto markets, the industry itself, and broader economic conditions. And it also recognizes investors’ ability this year to seize an opportunity after more positive reports on inflation emerged this month.
On Sunday, Joe DiPasquale, CEO of crypto fund manager BitBull Capital, noted “a long period of consolidation where short selling piled up.”
“Market is up, partially fueling the short squeeze,” DiPasquale wrote, but added that “Bitcoin and several altcoins have overheated and are due for a correction.” “We wouldn’t be surprised if Bitcoin hits $20,000 in the coming days would test.”
“For the coming week, market participants should keep the downside risks in mind and may look to take profits.”
And on Tuesday, Matt Weller, FOREX.com’s global head of research, attributed the rally to market dynamics, including the liquidation of “a large short position.” Weller said he’s now seeing “a small portion of this FOMO from traders who thought they had all year to buy near the bottoms.”
In an email on Tuesday, Edward Moya, senior market analyst at forex market maker Oanda, struck a more optimistic tone, although noting that “the recent rally has failed to break above $23,500, prompting a “small pullback towards ” could lead the $22,000 region.”
“When the dust settles on Q4 GDP, the Fed’s preferred measure of inflation, and the FOMC decision, strong resistance should come from the $25,000 level. Bitcoin’s rally is becoming very interesting or could be ripe for a near-term pullback,” Moya wrote
8:30 HKT/SGT (00:30 UTC): Consumer Price Index Australia (Q4/month/year)
1pm H1HKT/SGT (5am UTC): Japan’s leading economic index (Nov)
4pm HKT/SGT (8am UTC): Non-monetary policy meeting of the European Central Bank
In case you missed it, here’s the latest episode of “First Mover” on CoinDesk TV:
Bitcoin hovers near $23,000; How Congress is preparing to regulate crypto
Bitcoin (BTC) is up more than 35% at certain points this month to above $23,000, its steepest rise since October 2021, according to CoinDesk data. Forex.com Global Head of Research Matt Weller shared his analysis of the crypto markets. Also, Rep. Warren Davidson (R-Ohio) and SEC Commissioner Hester Peirce shared their insights into the future of crypto regulation in 2023. And Mick Mulvaney, strategic adviser to the Astra protocol and former White House chief of staff, also joined the conversation.
Genesis Demands $20.9 Million From “Bitcoin Jesus” Over Crypto Options Transactions Not Resolved: Court case seeks damages from Bitcoin Cash supporter Roger Ver in connection with alleged failure to resolve cryptocurrency options transactions closed on March 30 December 2022 have expired.
Crypto infrastructure company Blockstream raises $125 million for bitcoin mining: The company will use the funds to expand its bitcoin mining facilities amid strong demand for hosting.
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