Good morning Here’s what happens:
Prices: Bitcoin, Ether and other major cryptos continue to rise in weekend trading.
Insights: Ark Invest’s Cathie Wood is correct in her assumption that disruptive innovation technologies that address problems have gained traction despite market uncertainty.
Prices
CoinDesk Market Index (CMI)
1,004.63
−4.3 ▼ 0.4%
Bitcoin (BTC)
$20,868
−64.2 ▼ 0.3%
Ethereum (ETH)
$1,554
+5.7 ▲ 0.4%
S&P 500 daily close
3,999.09
+15.9 ▲ 0.4%
gold
$1,920
+1.9 ▲ 0.1%
Treasury yield 10 years
3.51%
▲ 0.1
BTC/ETH prices per CoinDesk indices; Gold is the COMEX spot price. Prices from approximately 4:00 p.m. ET
Bitcoin surges then holds near $21,000
By James Rubin
Still buoyed by tailwinds from falling inflation and a more optimistic view on the economy, Bitcoin topped $21,000 in early weekend trading for the first time since early November, before edging slightly lower.
The largest cryptocurrency by market cap recently traded at around $20,830, which was roughly flat over the past 24 hours, but is up a whopping 25% this year, with the most gains since last Tuesday when BTC was still around $17,400 swayed. The rise comes amid renewed investor confidence that the Federal Reserve will tame inflation without plunging the economy into recession, a trend that has propelled most riskier assets higher this year.
“We see the current rally in digital assets as a market reversal and NOT a bear market rally,” wrote Mark Connors, head of research at Canadian digital asset manager 3iQ, in an email.
In a weekly market analysis on Friday, Connors wrote that an early January rally in altcoins, including SOL — which is up about 80% year-to-date — “rolled into core layer 1s.” Noting recent, less aggressive comments from Fed governors, Connors added that “the potential for rate hikes and balance sheet shrinking to slow down…was a wink that the drastic reduction” in the money supply could end.
“Significant as the decline over the past 12 months has been the largest since 1959,” he wrote. “This is relevant for digital assets as BTC is viewed as a hedge against debasement and NOT inflation.”
The story goes on
Ether followed a similar pattern to Bitcoin, continuing its late-week momentum into Saturday to hit a two-month high before falling slightly. ETH recently changed hands above $1,550, around where it was at the same time a day earlier. Other major cryptos were mixed, with some up a few percentage points and others falling, although FTT, the token of embattled crypto exchange FTX, is up 35% recently to trade just above $2. FTT was trading above $35 seven months ago. SOL, the Solana blockchain token that has rallied over the past few weeks despite its involvement in the FTX debacle, is down about 5%.
MANA, the token of 3D virtual reality platform Decentraland, is up more than 16%.
US stock markets will close Monday to celebrate Martin Luther King Jr. Day, which honors the late civil rights leader. Major indices rose modestly on Friday to continue their own 2023 rally. The tech-heavy Nasdaq and the S&P 500, which has a strong tech component, are up more than 5% and 4%, respectively.
Still, the wealth rally could be short-lived if economic news falters, as a number of observers are predicting.
In a Wall Street Journal quarterly poll, nearly two in three economists expect the US to fall into recession this year, about the same percentage as in the previous poll, though many believe the economic contraction will be mild.
And in an email to CoinDesk, Joe DiPasquale, CEO of crypto fund manager BitBull Capital, cautiously wrote that “market participants should exercise caution on such spikes and wait for more stability and downside.”
“We remain bullish on accumulation at $18,000 and below and our long-term outlook remains unchanged for 2023 – accumulation during lows.”
Biggest Winners
Biggest Loser
insights
By SamReynolds
Cathie Wood is right: there is a lot going on in blockchain and tech that has been overlooked because of a “wall of worry”.
ARK’s Cathie Wood likely had a lot to worry about in 2022.
The growth investor and self-confessed Bitcoin HODLer saw her major funds like the ARK Innovation ETF (ARKK) and the ARK Next Generation Innovation ETF (ARKW) plummet over 50%. Crypto has been chaotic, as CoinDesk well documents, and tech hasn’t fared much better, with layoffs amid a cooling venture capital market.
But Wood said in a Jan. 12 blog post that all of those worries also left us missing out on a lot.
“In my 45 years on Wall Street and more than 30 years in portfolio management, I have never seen a market so out of whack,” she wrote. “Plagued by fears of stalled inflation and higher interest rates, the wall of worry in stock markets has soared to tremendous heights.”
But despite the market’s uncertainty, she believes disruptive innovation technologies that address problems have gained prominence in turbulent times.
The market is too focused on the carnage to notice all the advances that are happening in 2022, Wood wrote, citing disruptive technologies like ChatGPT, a next-generation artificial intelligence platform, new developments in autonomous vehicles, the ongoing Rise of digital wallets and, of course, blockchain.
“Despite the recent collapse of crypto exchange FTX, underlying public blockchains like Bitcoin and Ethereum have not missed a beat in processing transactions,” Wood wrote.
Indeed, not skipped: Over the last month, bitcoin is up 25.6%, with the world’s largest digital asset experiencing one-day price jumps not seen in months. It’s been a fairly positive start to the year, with an upward trend in trading volume.
So also for Woods funds. ARKK is up 18.2% year-to-date, and ARKW is in the green at 8.2% mom.
Tech is ubiquitous and scaling fast. That’s why software eats the world.
The market has shown that the demand for blockchain and crypto is still there. If anything, the turmoil of 2022 was an exercise in shaking off bad players and strengthening the positions of good players. Let’s just make sure we don’t miss what the good guys are doing with this wall of worry in front of us.
Important events.
2:00 HKT/SGT (18:00 UTC) China’s Gross Domestic Product (YoY/Q4)
7:00 am HKT/SGT (23:00 UTC) UK ILO Unemployment Rate (Nov)
7:00 am HKT/SGT (23:00 UTC) European Union Harmonized Index of Consumer Prices (YoY/Dec)
CoinDesk TV
In case you missed it, here’s the latest episode of “First Mover” on CoinDesk TV:
Crypto.com plans to cut 20% of staff; SEC alleges Gemini Genesis sold unregistered securities
Crypto.com was the latest company to slash its workforce by around 20% as the crypto winter lingers. Sylvia Jablonski, CEO of Defiance ETFs, and Brian Mosoff, CEO of Ether Capital, shared their analysis of the crypto markets. Also, the US Securities and Exchange Commission (SEC) claimed that crypto exchange Gemini and crypto lender Genesis Global Capital sold unregistered securities in a lawsuit filed late Thursday. DCG owns Genesis and CoinDesk.
headlines
New MetaMask product to add liquid staking via Lido and Rocket Pool: The update comes two months ahead of an expected Ethereum upgrade that will allow users to withdraw their staked ETH.
Bloomberg, WSJ, CoinDesk Among the media wanting to know who rescued Sam Bankman-Fried: Lawyers for the former CEO of failed crypto exchange FTX requested and received anonymity for two parties backing the $250 million bond issue, out of the Bankman-Fried emerged prison.
Inside Bonk Inu: How 22 Developers Put the Shiba Inu Fun Into Solana and Away From FTX: Disturbed, disgusted, and jaded, Solana’s popularity took a hit when reports of possible fraud at Sam Bankman-Fried’s then-giant crypto exchange FTX first surfaced bright But the developers found a way to boost activity.
Bitcoin “Volatility Smile” Shows Increased Demand for Bullish Engagement: Bitcoin volatility smile is a graphical representation of implied volatility, or demand, for options at different exercise levels.
President Herbert Hoover saves the day for a crypto bank? Yes, that’s strange: Silvergate was backed by the Federal Home Loan Bank system created in 1932.
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https://nov.link/cryptoanswers
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