 March 17, 2021  Everything you need to make sense of the crypto markets and beyond Sponsored By:  By the CoinDesk Markets Team Edited by Lawrence Lewitinn If you were forwarded this newsletter and would like to receive it, sign up here. Bitcoin (BTC) -1.4% $55,083 Ether (ETH) -1.8% $1,787 (Price data as of Mar. 17 @11:00 UTC) Good morning. Here's what we're writing about:
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MARKET MOVES by OMKAR GODBOLE Bitcoin Drops 3% Ahead of Fed Meeting, Ignoring a Bullish Chart Pattern
Bitcoin is nursing losses ahead of a crucial Federal Reserve policy meeting that could reveal the U.S. central bank's plans in the wake of rising inflation expectations.
The top cryptocurrency, which is seen by many investors as a hedge against rising prices, was trading near $55,000 at press time, for a 3.3% drop on the day, based on CoinDesk 20 data. The decline upended any follow-through to Tuesday's impressive bounce from sub-$53,500 to nearly $57,000.
"We expect the Fed to keep the borrowing costs at record lows and maintain quantitative easing," said Joel Kruger, currency strategist at LMAX Digital. "The key focus will be on interest rate projections and whether or not an improved pandemic recovery outlook will translate to an earlier hike."
With inflation expectations at a 13-year high and the economy showing signs of life, markets are pricing an early unwinding of stimulus in the form of interest rate hikes.
As per Reuters, Eurodollar futures, which track short-term U.S. interest rate expectations, are now foreseeing a first rate hike by March 2023 versus late-2023 a few weeks ago. The U.S. 10-year bond yield recently rose to over 12-month highs above 1.6%.
"If the Fed pushes back against market expectations and signals no rate hike until 2024, we think such an outcome would be supportive of bitcoin," Kruger said.
However, the cryptocurrency may face selling pressure if the central bank signals an early scaling back of stimulus, Kruger added. Investors typically buy inflation hedges when expecting rate cuts and vice versa.
Two-thirds of economists recently surveyed by Bloomberg expect policymakers to keep rates near-zero rates through 2023. Besides, the market pricing of rate hikes has gone wrong in the past. While markets expected a rate increase in 12-18 months of the 2008 crash, the Fed delivered the first rate hike only in 2015, according to Reuters.
Aside from interest rate projections, the focus would be on Fed Chair Jerome Powell's take on the recent rise in bond yields and the central bank's decision on the supplementary leverage ratio (SLR), a capital-adequacy measure for banks. A looser SLR requirement theoretically allows banks to expand their balance sheets faster, which creates incremental risk but frees up financing for loans to governments, businesses and households.
"The market wants the SLR extended and reassurances regarding yields. If the SLR doesn't get extended and Powell plays rising yields down, turmoil in rates would ensue, pushing other markets down," trader Alex Kruger tweeted.
Bitcoin fell by 20% in the last week of February, after the U.S. bond market jitters came to the forefront with the sharp rise in the 10-year bond yield.
As per technical charts, Tuesday's low of $53,221 is now the level to defend for bitcoin bulls.
 Bitcoin's daily chart (TradingView)
Bitcoin formed a "hammer candle" on Tuesday, signaling an end of the pullback from the record high above $61,000 and scope for another leg higher. It's called a hammer candle because of its shape on the price chart (see above), and the pattern looks bullish.
However, the bullish setup would be invalidated if Tuesday's low is breached. That would pave the way for a drop toward $47,000 – a strong level of support revealed by the blockchain analytics firm Glassnode via a tweet earlier this month.
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TECHNICIAN'S TAKE by DAMANICK DANTES Bitcoin Stalls at $57K Resistance, Lower Support Around $53K Bitcoin (BTC) continues to struggle after failing to hold an all-time-high around $60,000 over the weekend. On the hourly chart, resistance is around $57,000 with short-term support around $53,000.  Chart shows a tight trading zone for bitcoin on the hourly chart (Source: TradingView)
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From a long-term perspective, the outlook for bitcoin remains constructive, although drawdowns can be sharp and fast during the late stage of a rally, as seen in the chart below. This suggests tighter stops should be used, especially until short-term trend signals improve.
Chart shows bitcoin's extended drawdowns during bear markets, and frequent whipsaws around the end of bull markets (Source: Koyfin)
--Damanick Dantes
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BOLO
Be on the look out for these upcoming events:
- 14:00 UTC (10:00 a.m. EDT): U.S. House Committee on Financial Services Virtual Hearing: "Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide, Part II."
Today's witnesses:
Sal Arnuk, Partner/Co-Founder, Themis Trading LLC
Michael Blaugrund, Chief Operating Officer, New York Stock Exchange
Dr. Vicki Bogan, Associate Professor, Cornell University
Alexis Goldstein, Senior Policy Analyst, Americans for Financial Reform
Dennis Kelleher, Co-Founder, President and Chief Executive Officer of Better Markets
Alan Grujic, CEO, All of Us Financial
Michael Piwowar, Executive Director, Milken Institute
- 18:00 UTC (2:00 p.m. EDT): FOMC meeting press conference.
What to look out for: The market will play close attention to Powell's words for clues as to whether the Fed plans to raise rates any time soon.
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BIGGEST MOVERS
These are the biggest movers in the CoinDesk 20 over the past 24 hours:
Gainers:
Losers:
The CoinDesk 20 filters from the larger universe of thousands of cryptocurrencies and digital assets to define a core group of 20. These assets constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges.
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ICYMI
NFTs Gone Wild With Gary Vaynerchuk, MetaKovan and Crypto.com
What do internet personality Gary Vaynerchuck, Crypto.com and MetaKovan, the pseudonymous buyer of Beeple's $69M NFT, have in common? They join "First Mover" to discuss their passion for NFTs, the different reasons for their investments, and why it's important for the mainstream audience to understand this phenomenon.
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SPONSORED BY NEM GROUP
Symbol from NEM, the next-generation public blockchain, launched March 15th, marking a milestone in NEM's vision for a new economic and digital system. Boasting enterprise-grade security and programmability, Symbol smooths business friction and increases the flow of data to supercharge the creation, exchange and protection of assets. NEM Group - comprising NEM Software, NEM Trading, and NEM Ventures - nurtures a strong and healthy ecosystem to shape the development and future of blockchain technology for generations to come.
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LATEST HEADLINES
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An upstart stablecoin issuer out of South Korea is making a run at MakerDAO's DAI, the fourth-largest cryptocurrency in this category.
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Hawaiian House Dems Ask State Regulator to Reconsider Tough Rules for Crypto Firms
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BitMEX Co-Founder Arthur Hayes Offers to Surrender to US Authorities Next Month
Under a proposal, Hayes would be allowed release on a $10 million bond secured by $1 million in cash.
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Janine Yorio: What NFT Sales Mean for Digital Real Estate
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Ajit Tripathi: NFTs Can Bring the Real World On-Chain
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Avant-Garde Painting to Be Sold With NFT-Backed Proof of Provenance
The sale of the work by Wladimir Baranoff-Rossine will take place on the Mark Cuban-backed NFT marketplace Mintable.
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Coinbase Registers 114.9M Shares for Public Listing
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Stellar Development Foundation Invests $750K in Nigeria Remittance Platform
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Valid Points: Ethereum's Proof-of-Stake May Happen Sooner Than You Think
A "quick merge" outline ostensibly serves as a notice against any further agitation from Ethereum miners.
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Swiss Crypto Firm Bitcoin Suisse Refused Banking License
FINMA cited money-laundering defense "weaknesses" as one reason for the license denial.
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Introducing Community Crypto, an intimate look at digital transformation
From the world leader in crypto news and events, the all-new CoinDesk TV covers the rapidly evolving world of digital finance and its role in the global economy. On Community Crypto, "Bitcoin and Black America" author Isaiah Jackson explores how crypto is creating and impacting communities. Jackson will organize virtual meetups in the U.S. and around the world, then dive deeper into key themes, issues or questions that arise.
Watch Community Crypto Thursdays at 5 p.m. ET on YouTube or CoinDesk.com.
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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.
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