Good morning. Here’s what’s happening:
Prices: Bitcoin and other major cryptos were holding the same range they'd occupied prior to the latest inflation figures.
Insights: The CEO of crypto trading firm Amber says that there's no better asset for holding value than bitcoin.
Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis. And sign up for First Mover, our daily newsletter putting the latest moves in crypto markets in context.
● CoinDesk Market Index (CMI): 949.89 +1.2%
● Bitcoin (BTC): $19,663 +2.9%
● Ether (ETH): $1,322 +2.2%
● S&P 500 daily close: 3,669.91 +2.6%
● Gold: $1,666 per troy ounce −0.2%
● Ten-year Treasury yield daily close: 3.95% +0.05
Bitcoin, ether and gold prices are taken at approximately 4pm 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. Information about CoinDesk Indices can be found at coindesk.com/indices.
Bitcoin's Counterintuitive Rebound
By James Rubin
So much for conventional wisdom.
The hotly anticipated Consumer Price Index (CPI) arrived hotter than expected, the type of reading that usually sends riskier assets spiraling down.
Instead, bitcoin did the reverse on Thursday, recovering from an early stumble to regain its now familiar perch over $19,000. The largest cryptocurrency by market capitalization, which was recently up more than 2% and trading above $19,600, has been occupying a narrow band between $19,000 and $21,000 for much of the past month, hamstrung by concerns about untamable inflation and the rising prospect of a harsh recession.
"What we saw today was the culmination of a month long build-up in protection purchasing and build up in implied and realized volatility," Jon Campagna, head of trading and capital markets at crypto investment fund CoinFund, wrote to CoinDesk in an email.
Campagna noted the pronounced declines in bitcoin and ether one-day trading volumes from the previous night following the CPI report, and a "similar dynamic" in equities markets. "The ViX (CBOE Volatility Index) actually declined 4.5%!" he wrote. "The CPI number was hot, but it was an expected level of hot. This caused a relief rally as the put protection was sold and books were adjusted to slightly increase risk."
The 8.2% CPI, up 0.1% from last month's figure, and 6.6% core inflation reading, which does not include volatile food and energy prices, offered the latest reminder of inflation's stubbornness. Both readings represented four-decade highs.
Ether and other major altcoins followed bitcoin's Thursday pattern, plunging steeply before rapidly recovering lost ground. The second largest crypto in market value was recently changing hands below $1,300, roughly flat from Wednesday, same time. GALA and DOT were among the day's big gainers, recently rising more than 3% and 2%, respectively. ADA sank slightly. The CoinDesk Market Index (CMI), a broad-based market index that measures the performance of a basket of cryptocurrencies, recently increased by 0.52%.
Stocks
Crypto prices dovetailed with equity markets, which also sank early before rebounding with a vengeance with the tech-focused Nasdaq, S&P 500 and Dow Jones Industrial Average all climbing well over 2% to break six-day losing streaks as short-term sellers may have looked to benefit from recent plunges. The underlying conditions that have concerned markets, however, remain in full force with the U.S. central bank now even more likely than pre-CPI to stay on course for another 75 basis point rate hike – or perhaps higher. Mortgage rates in the once torrid housing market now stand at a two-decade high near 7%.
Meanwhile, at an Institute for International Finance (IIF) event on Wednesday, Jamie Dimon again called crypto tokens "decentralized Ponzis" even as he praised aspects of blockchain technology. The JPMorgan CEO has been among crypto's most prominent critics, intermittently voicing his concerns about security, even as his bank has been fined billions of dollars for its own violations of statutes.
In written comments to CoinDesk, Mark Connors, head researcher at Canadian digital asset firm 3iQ, said that today's activity had not changed the recent economic and investment backdrop. "Lots of cross currents," Connors wrote. "Nothing resolved except that inflation is more persistent than expected."
Connors added optimistically that bitcoin had been less volatile than the Nasdaq on Thursday. "That is a material difference, and one we believe will persist as equities drop."
He added: "The recent outperformance of BTC and ETH in Q3 and today's lower volatility profile are NOT an accident. The tourists are gone from crypto, BTC is on the right side of the halvening, crypto regulation is accelerating – critical to Institutional adoption and equity risk is massively underestimated."
Asset
Ticker
Returns
DACS Sector
Gala
GALA
+3.5%
Entertainment
Polkadot
DOT
+2.3%
Smart Contract Platform
Stellar
XLM
+1.7%
Smart Contract Platform
Asset
Ticker
Returns
DACS Sector
Cardano
ADA
−0.4%
Smart Contract Platform
Decentraland
MANA
−0.1%
Entertainment
Dogecoin
DOGE
−0.1%
Currency
Crypto Trading Firm Amber CEO Says Bitcoin Can Still Be an Inflation Hedge
By Shaurya Malwa
Crypto markets have largely mirrored the downtrend in major equity indexes, including the previous month’s sharp price corrections. .
Bitcoin and ether, the two largest cryptocurrencies by market capitalization, have fallen over 70% from all-time highs in 2021. Solana has dropped over 85%. The steep declines have been antithetical to bitcoin and other cryptocurrencies’ envisioned role as a hedge – similar to gold – against the real-world economy and popular financial instruments like stocks or bonds.
Crypto faithful have recently started questioning bitcoin’s hedging role as more speculative than real. But some traders, including Michael Wu, the co-founder of crypto trading firm Amber, have counter-argued that market dynamics explain recent falling prices instead of buyer sentiment.
“It is a bit early to say crypto failed as an “investment hedge,” Wu, recently told CoinDesk. “Short-term correlations say more about overall liquidity conditions, as we are on a rate-hiking cycle and supply-demand dynamics as most crypto investors are also tech investors and had to reduce their portfolio across the board, rather than fundamental drivers.”
Wu added: “Bitcoin is still a better form of storage of value than anything else that existed before, and Ethereum along with the decentralized digital economy being built upon it offers tremendous value as a tech infrastructure investment,” Wu said, stressing the “need to be more patient” to see the value propositions of alternative currencies play out over the next few years or even decades.
Wu and similar types of investors are taking a long-term approach toward cryptocurrency investments that actively avoid chasing short-term movements, and instead, embrace a structural shift from traditional finance to the crypto ecosystem.
“If we zoom out beyond the short-term trading horizon which crypto folks are too used to focusing on and look at the long-term structural trends, we will see that the fundamental investment values in crypto as an asset class have continuously become stronger and stronger over time,” Wu said.
Devcon Bogota 2022
11:30 a.m. HKT/SGT(3:30 UTC) Export and Import Price Indexes (Sept./YoY)
In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:
Bitcoin Falls After Hotter-Than-Expected Inflation Report; OCC Chief Hsu on Banks’ Crypto-Related Activities
The Consumer Price Index (CPI) report for September showed inflation ran hotter than expected in spite of interest rate hikes. Crypto markets were down across the board. Bob Iaccino of Path Trading Partners joined "First Mover" to discuss what happens next. To discuss the future of crypto regulation acting Chief of the Office of the Comptroller of the Currency (OCC) Michael Hsu and former SEC Branch Chief Valerie Dahiya of Perkins Coie LLP joined First Mover.
Ether Becomes Deflationary for First Time Since the Merge: Coinbase: The number of tokens fell by 4,000 over the last week as more ether was burned verifying transactions than was created, the report said.
Stablecoin Issuer Tether Cuts Commercial Paper Holdings to Zero: The company has been gradually replacing its commercial paper holdings with U.S. Treasury bills.
Police Complaints in This Indian District Are Going on the Polygon Blockchain: "This is very close to my heart," tweeted Polygon's co-founder Sandeep Nailwal, citing corruption in local police departments that can lead to the manipulation of public complaints.
Bitcoin Sinks After US CPI Report Shows Inflation Hotter Than Expected: The "core" Consumer Price Index, seen as a more steady indicator of inflation, rose 6.6% from a year prior – a four-decade high.
China's CBDC Transactions Reach $14B as Uptake Slows, South China Morning Post Reports: Transaction volume in e-CNY has only increased by 14% in 2022 from the end of last year compared with the 154% growth recorded in the last six months of 2021.
Related Quotes
NYDIG, the bitcoin trading and banking firm, laid off about a third of its workforce last month, people familiar with the matter said. The cutbacks came less than two weeks before NYDIG announced publicly that it had replaced its top two executives. On Oct. 3, NYDIG said that Chief Executive Robert Gutmann and President Yan Zhao had stepped down from their roles.
Crypto brokerage services provider NYDIG laid off over 100 people in the past few weeks, or about a third of its staff.
Bitcoin and other cryptocurrencies are swinging around Thursday, just like the stock market, in the wake of September CPI data.
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Wall Street stock indexes made a dramatic recovery, closing sharply higher after an earlier sell-off on Thursday while the dollar gave up earlier gains as investors poured back into riskier bets after digesting a red-hot U.S. inflation reading that fueled bets for a big Federal Reserve rate hike next month. Traders reversed course after initially flipping to safety mode when the U.S. Labor Department's consumer prices index (CPI) report showed headline CPI gaining 8.2% annually as rents surged by the most since 1990 and food prices rose. The dollar fell against most currencies as investors ended up taking the opposite approach to the market's initial response to the data.
Before Moira Rose from Schitt's Creek and her wall of different-colored wigs, there was Cher — the 76-year-old singer earned her diva status both for her six-decade singing career and a number of iconic hair moments. Cher is known for extravagance in all aspects of her life and the homes she owns are no exception. As first reported by the Wall Street Journal, Cher just placed this home on the market for $85 million.
Bitcoin gained in Thursday morning trading in Asia, with the world’s largest cryptocurrency holding above support at US$19,000. Ether, second on the list of top 10 cryptocurrencies by market capitalization, excluding stablecoins, also gained. Other coins on the top 10 moving higher included Solana, XRP and Tron. Cardano fell. See related article: Binance to hard […]
Firms active in crypto are concerned about their reputation, but those coming in care more about mitigating risk.
Bitcoin dipped but just held the US$19,000 support line in Thursday evening trading in Asia. Excluding stablecoins, all other cryptocurrencies on the top 10 list by market capitalization fell. Cardano led the declines. See related articles: Judge grants amicus requests to support Ripple in lawsuit with SEC Fast facts Bitcoin fell 0.52% in the past […]
Bitcoin (BTC) bounced back above $19K, regaining some momentum after the hotter-than-expected CPI report triggered a plunge in the token’s price. Digital Asset Research CEO Doug Schwenk discusses the possibility of a Fed pivot and his crypto outlook amid recession concerns.
Solana (SOL) and Polkadot (DOT) are two of the crypto market’s top crypto assets by market capitalization, prominence, and adoption rate.
U.S. Treasury Secretary Janet Yellen reiterated the importance of building a regulatory framework for digital assets. Stablecoin issuer Tether reduced its commercial paper holdings to zero and replaced them with U.S. Treasury bills. Bankrupt crypto lender Voyager Digital's executives have included sweeping legal immunity for themselves in the proposed agreement for their assets to be sold to FTX.US for $1.4 billion.
Coinsquare has also been approved to operate an Automated Trading System, allowing it to facilitate trading in illiquid coins.
CVS Health (NYSE: CVS) has been on a buying spree as the company branches out beyond being a retail pharmacy and health insurer to become a primary care and health services company. Last Friday (Oct. 7), Bloomberg reported that the company is competing with Humana Inc. to purchase Cano Health, a value-based care provider based in Miami. It's also important to note that, as of Monday afternoon, neither Cano nor CVS had confirmed that such talks were in place.
Quant Insight Head of Analytics Huw Roberts joins Yahoo Finance Live to discuss the crypto market, bitcoin falling below $19,000, the September CPI print's impact on crypto stocks.
Federal Reserve Governor Michelle Bowman said on Wednesday that if high inflation does not start to wane she will continue to support aggressive rate rises aimed at taming price pressures. "Inflation is much too high, and I strongly believe that bringing inflation back to our target is a necessary condition for meeting the goals mandated by Congress of price stability and maximum employment on a sustainable basis," Bowman said in the text of a speech to be delivered before a gathering in New York City. The policy maker said Fed rate rises this year, which have been very large relative to the pace of past rate rise campaigns, had her full support.
The stock market took it literally on Thursday with a massive rally following an inflation reading that everyone agreed was way too hot. The CPI rose 0.4% in September, up from 0.1% in August, and above estimates for 0.2%. Core consumer prices, which don’t include food and energy, rose 0.6%, above forecasts for 0.4%, and unchanged from August.
(Bloomberg) — A shock turnaround in equities sent Wall Street searching for something — anything — to explain how yet another red-hot inflation number translated into one of the best days of the year. Most Read from BloombergStocks Surge in Wild Ride After CPI Data Selloff: Markets WrapWorld Faces New Threats From Fast-Mutating Omicron VariantsCore US Inflation Rises to 40-Year High, Securing Big Fed HikeKroger Wants to Merge With Albertsons to Create US Grocery GiantIntel Is Planning Thousan
Stocks plunged to bear market lows on a hot inflation report, but then rebounded powerfully. Here's what investors should do now.