First Mover Asia: Bitcoin Trades Near $47K Amid Low Volumes During Year-End Holidays

First Mover Asia: Bitcoin Trades Near $47K Amid Low Volumes During Year-End Holidays

(Edited by Greg Ahlstrand and James Rubin)

Good morning. Here’s what’s taking place:

Market strikes: Bitcoin trades close to $48,000, whereas layer 1 token ALGO positive factors on incentive program information

Technician’s take (Editor’s notice): Technician’s Take is taking a hiatus for the vacations. In its place, First Mover Asia is publishing a chunk from CoinDesk reporter Damanick Dantes’ Year-End Review collection, which recaps this yr’s most dramatic moments in cryptocurrency markets.

Catch the most recent episodes of CoinDesk TV for insightful interviews with crypto {industry} leaders and evaluation.

Prices

Bitcoin (BTC): $47,394 -0.3%

Ether (ETH): $3,742 -1.66%

Markets

S&P 500: 4,793 +0.14%

DJIA: 36,488 +0.25%

Nasdaq: 15,766 -0.98%

Gold: $1,803 -0.15%

Market strikes

Bitcoin continued to fall, buying and selling close to $47,000 on Wednesday, after a pointy drop by greater than 6% a day in the past.

The No.1 cryptocurrency by market capitalization had one other low every day quantity throughout centralized exchanges because of the year-end vacation season. The middle of the market remains to be on the expiry of the choices contract on Dec. 31.

A complete of 124,700 choice contracts price practically $6 billion are set to run out on Friday, in response to information supplied by Skew. Options are hedging devices that give the purchaser the suitable however not the duty to purchase the underlying asset at a predetermined worth on or earlier than a particular date.

At the identical time, sensible contract platform tokens algorand (ALGO) and close to (NEAR) led the most important every day positive factors throughout U.S. buying and selling hours on Wednesday. ALGO’s positive factors got here after Algorand Foundation introduced a liquidity incentive program with Algorand’s first algorithmic cash market and stablecoin protocol Algofi.

Year-end market wrap

Market Wrap Year-End Review: Institutions Cash Out of Bitcoin: One massive funding agency pocketed massive earnings by promoting bitcoin close to the market prime in April earlier than the worth tumbled.

Bitcoin price events

Hello, Market Wrap readers! During the ultimate two weeks of 2021, we’re utilizing this area to recap this yr’s most dramatic moments in cryptocurrency markets – and spotlight the important thing classes from this fast-evolving nook of worldwide finance. Over a collection of eight posts beginning on Dec. 20 and operating via Dec. 30, we’ll recap what shook crypto markets this yr. (If you’re searching for immediately’s costs and information headlines, please scroll down.)

In a current episode of this year-in-review collection, we recapped the onslaught of worry, uncertainty and doubt – “FUD,” in crypto-speak, that means actually any adverse headlines – that shook crypto markets in April and May. Mood dampeners included the specter of greater U.S. capital positive factors taxes, China’s reinvigorated efforts to stamp out cryptocurrency buying and selling and mining and the potential environmental harms from the Bitcoin blockchain’s intensive electrical energy utilization.

Today, we’ll present further causes for widespread promoting that occurred in April and May. After bitcoin’s highly effective rally to start out the yr, fueled by worry of quick inflation, some massive buyers grew involved about rampant hypothesis within the almost-anything-goes market and a slowdown in international cash provide development. In truth, some worth chart indicators had been already suggesting that bitcoin was overvalued. By June, BTC had stabilized at round $30,000, and guess what occurred then? Traders purchased the dip.

Funds money out

Bitcoin price rollercoaster

Ruffer Investments, a U.Ok-based asset administration firm, was one of many earliest massive institutional buyers to wager on bitcoin – beginning in November 2020.

As costs shot up throughout early 2021, Ruffer basically rode the wave whereas different fund managers had been simply warming as much as crypto, lured by its potential for prime returns.

“Last November we gained publicity to bitcoin. We considered it as an choice on an rising retailer of worth with a extremely skewed and engaging danger/reward profile,” Duncan MacInnes, funding director at Ruffer Investments, wrote in a blog post on July 9.

But even Ruffer was greatly surprised by the ferocity of bitcoin’s worth rally initially the yr to a brand new all-time excessive of round $65,000. And Ruffer cashed out. The market gave the impression to be unsustainable.

“In 2021, the thrill is in cryptocurrencies and decentralized finance. The promise is actual. But so, too, is the surge in extra liquidity generated by fiscal stimulus and ongoing quantitative easing. Excess liquidity regarded to us to be peaking in April,” MacInnes wrote.

The Sunday Times reported in June that Ruffer made a $1.1 billion revenue in 5 months.

Bitcoin price and global money supply

Extreme bullish sentiment

In phrases of the market reversal, it certain didn’t assist that a number of crypto-market indicators had been flashing indicators of extreme shopping for exercise within the month or so main as much as bitcoin’s April worth peak. For instance, round March, Alternative.me’s Crypto Fear & Greed Index reached the best degree since June 2019, which had preceded a virtually 60% BTC worth sell-off.

There had been different warning indicators in each blockchain information and worth charts. (See the chart beneath, which seems to be at technical indicators on bitcoin’s “market worth to realized worth” ratio, a blockchain-based market metric often known as MVRV.)

Crypto {industry} responds to ESG considerations

As nagging environmental considerations over bitcoin’s environmental footprint continued to weigh available on the market, crypto-industry executives took steps to reply.

Elon Musk – the billionaire Tesla CEO whose market-moving tweets earlier within the yr revealed an on-again, off-again infatuation with bitcoin – sounded a recent openness to crypto {industry} dialogue over the Bitcoin blockchain’s electrical energy utilization. Toward the top of May, Musk tweeted that he spoke with bitcoin miners about utilizing renewable power sources. He wasn’t turning his again on bitcoin utterly, which supplied some hope for discouraged bulls.

The announcement on May 24 of the Bitcoin Mining Council, which banded collectively miners and enormous buyers, together with MicroStrategy CEO Michael Saylor, despatched BTC instantly greater by virtually 12%. At that time, market panic from the April sell-off started to fade, and a few merchants started to purchase the dip.

BTC’s worth finally stabilized at about $30,000 in June as excessive promoting strain started to sluggish. The chart beneath reveals the practically 50% worth drop between April and June. And then, over the course of July and August, bitcoin largely traded sideways, establishing a brand new worth vary as some technical indicators instructed BTC’s worth was oversold.

The query within the minds of crypto merchants was whether or not the brand new market surroundings represented a pause on the best way down or the inspiration for a recent leg up.

Bitcoin daily price chart

Price actions had been far much less unstable than that they had been in current months, and it appeared as if many buyers nonetheless believed in bitcoin’s potential as a long-term retailer of worth. Bitcoin miners claimed to be searching for methods to cut back or mitigate their environmental footprint, and many of the community’s mining energy relocated away from crypto-unfriendly China.

Plus, merchants weren’t utilizing as a lot leverage, and market circumstances appeared to calm markedly. In different phrases, there wasn’t a lot froth.

A key takeaway was that, regardless of what immediately appeared to an unrelenting onslaught of adverse headlines for the bitcoin market, the worth was holding up remarkably properly on a historic foundation: The April all-time excessive of round $65,000 was now wanting distant, however so was the 2020 low of round $3,850.

Speculation was nonetheless operating excessive in different areas of the crypto market. In the subsequent episode, we’ll present how some merchants flocked to different cryptocurrencies and non-fungible tokens (NFT) whereas bitcoin traded sideways.

Important occasions

5 p.m. HGT/SGT (9 a.m. UTC): European Central Bank M3 cash provide (3 mos./YoY/Nov.)

5 p.m. HGT/SGT (9 a.m. UTC): European Central Bank personal loans (Nov./YoY)

9:30 p.m. HGT/SGT (1:30 p.m. UTC) U.S. items commerce steadiness preliminary (Nov.)

11 p.m. HGT/SGT (3 p.m. UTC): U.S. pending house gross sales (MoM/YoY Nov.)

CoinDesk TV

In case you missed it, listed below are the newest episodes of “First Mover” on CoinDesk TV:

Legendary Investor Bill Tai on NFTs, Metaverse and the Future of Blockchain

In this particular episode of “First Mover,” host Christine Lee saT down with Bill Tai, co-founder and chairman of “NFT for social good platform,” Metagood. The enterprise capital legend, startup mentor, prodigious networker, kitesurfer and passionate conservationist defined the social potential and attainable dangers of NFTs. He additionally shared his insights into the metaverse, tokenization, and wider outlook for blockchain know-how.

Latest headlines

Marathon Digital Named Top Mining Pick Heading Into 2022 by DA Davidson: The miner’s inventory has compelling upside after a current sell-off among the many group, the funding financial institution mentioned.

Newly Minted Bitcoin Miner Gem Mining Reaches Hashrate of 1.25 EH/s: Gem’s mining energy now accounts for about 1% of the Bitcoin community’s complete.

Longer reads

10 Great Novels About Money (and Crypto): A roundup of books price studying for Culture Week.

Today’s crypto explainer: What Is Ether?

Other voices: Asia Summitt: Crypto’s Continuing Chronicles

Said and heard

“The new steerage displays a rising actuality that we’re going to need to be taught to dwell with covid as a persistent danger, and may’t let it shut down society.” (Scott Gottlieb, a Pfizer board member and former Food and Drug Administration commissioner, in a Washington Post article)



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