  The latest moves in crypto markets, in context By the CoinDesk Markets Team Edited by Lawrence Lewitinn, Managing Editor, Global Capital Markets September 13, 2021 Sponsored by  (Price data as of September 13 @ 11:00 UTC) If you were forwarded this newsletter and would like to receive it, sign up here.
Good morning, and welcome to First Mover. Here's what's happening this morning:
And check out the CoinDesk TV show "First Mover," hosted by Christine Lee and me at 9:00 a.m. U.S. Eastern time. Today's show will feature guests:
– Lawrence Lewitinn
Biggest Movers These are the biggest movers in the CoinDesk 20 over the past 24 hours:
Gainers:
Losers: The CoinDesk 20 are 20 digital assets filtered from the larger universe of thousands of cryptocurrencies and constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges.
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Market Moves
by Omkar Godbole
Bitcoin Eyes U.S. Inflation Report, Potential Dollar Liquidity Squeeze
Bitcoin's immediate bullish trajectory has weakened following the last week's double-digit price drop. The cryptocurrency's near-term prospects hinge on Tuesday's U.S. inflation report.
The leading cryptocurrency by market value is trading 3% lower on the day at $44,500, having dropped 11% last week. That was the biggest single-week percentage decline since May.
According to Coinbase Institutional, bitcoin's immediate bullish outlook has weakened, courtesy of last week's slide, and the cryptocurrency could consolidate between $44,000 and $48,000 for the time being.
Some chart experts fear a deeper drop as the price structure now looks similar to the one observed after bitcoin's double-digit slide in the second half of April.
TradingView post discussing a bearish price structure. (Source: TradingView)
An extended sell-off could materialize if the U.S. Consumer Price Index (CPI) figure for August, scheduled for release at 18:00 UTC on Tuesday, prints above 5% annualized. That could speed up the Federal Reserve's plans to begin scaling back its liquidity-boosting asset purchases.
Bitcoin's mid-May slide from $58,000 to $30,000 happened after official data released on May 12 showed the U.S. CPI at a three-year high and triggered taper fears. The sell-off also coincided with China's crackdown on cryptocurrencies and concerns regarding the negative environmental impact of cryptocurrency mining.
"Inflation remains the key as usual – specifically when base effects will end & CPI prints begin to reflect the true year-on-year picture for the Fed," QCP Capital said in its Telegram channel. "Arguably, the worst of the base effects have now run its course [as seen in the chart below]. If inflation still remains above 5% from here, the hawks will surely start expressing worry."
U.S. CPI: The worst of the base effects look to have run their course. (Source: Bloomberg, QCP Capital)
Several Fed members have already turned hawkish, signaling a willingness to begin the taper this year. Some observers are concerned that a possible taper would lead to a substantial drop in the dollar liquidity in the fourth quarter, and could coincide with the U.S. Treasury issuing more bonds to rebuild its coffers (the Treasury General Account, or TGA) after the debt ceiling is lifted.
According to the Wall Street Journal, the U.S. government could run out of cash and hit the debt ceiling between mid-October and mid-November. The Fed is expected to begin tapering around the same time.
"The U.S. Treasury will likely quickly rebuild the cash balance after a debt ceiling suspension as the new 'equilibrium level' of the TGA seems to be around USD 800bn. This is a net liquidity withdrawal of almost USD 600bn compared to the current scenario, which cannot be seen as good news for risk appetite," analysts at Nordea Bank said in the weekly research note published on Friday.
U.S. Treasury to withdraw dollar liquidity in fourth quarter. (Source: Nordea, Macrobond)
Bitcoin and other traditional market risk assets have soared in the past 18 months, thanks to the liquidity deluge brought on by the Fed's stimulus program. So, a liquidity squeeze due to a Fed taper and U.S. Treasury actions could weigh on asset prices in general, and especially on bitcoin because capital in crypto markets is mercenary and tends to overreact, according to Messari's Mira Christanto.
Top investment banks foresee market risk aversion strengthening in the weeks ahead. According to the Australian Finance Review, Morgan Stanley expects U.S. stocks to decline by as much as 15% by year-end, while Bank of America foresees a 6% drop.
A stock-market decline could add to bearish pressures around bitcoin. "The world still sees bitcoin as a risk-on asset," Charles Edwards, founder of Capriole Investments, tweeted. "Almost every bitcoin correction in 2021 has correlated with an S&P500 correction of -2% or more." The S&P 500 fell by 1.69% last week alongside bitcoin's 11% decline.
Read the original story here:
Bitcoin Eyes U.S. Inflation Report, Potential Dollar Liquidity Squeeze
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Technician's Take
by Damanick Dantes, CMT
Bitcoin Dips Below $46K; Support Around $42K
Bitcoin (BTC) continues to fade after last week's sell-off from the $52,000 resistance level. Buyers were unable to hold support at the 200-day moving average around $46,000, although the pullback could stabilize around the $42,000 breakout level achieved in early August.
The long-term uptrend is weakening as sellers attempt to establish a lower price high since April. Upside appears to be limited given signs of slowing momentum and resistance around $50,000-$55,000.
Bitcoin 24-hour chart. (TradingView, CoinDesk)
- The relative strength index (RSI) on the four-hour chart is rising from oversold levels over the past few days.
- Buyers could return near $42,000 support, although resistance around $48,000 could limit price rises.
- BTC is trading within a tight range, which means price is consolidating after a near 15% decline over the past week.
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A Message from ErisX
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BOLO
Be on the lookout for the following events today:
- ALL DAY: SALT Conference (Sept. 13 - 15) in New York.
Speakers include:
- Jeremy Allaire, Circle
- Zac Prince, BlockFi
- Sam Bankman-Fried, FTX
- Michael Casey, CoinDesk
- Steve Cohen, Point72
- Ray Dalio, Bridgewater Associates
- Sarah Kunst, Cleo Capital
- Marc Lasry, Avenue Capital
- Peter McCormack, What Bitcoin Did
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ICYMI
In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:
"First Mover" is joined by former CFTC Commissioner Brian Quintenz, who just left the agency at the end of August and is now joining venture capital firm a16z as an advisor. Crypto.com CEO Kris Marszalek shares insights into the multi-year sponsorship deal with Paris Saint-Germain and why it matters. PowerTrade Co-Founder Mario Gomez Lozada provides his short-term and long-term outlook for bitcoin.
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A Message from CoinDesk
Our Bitcoin for Advisors 2021 event is now fully virtual.
Join from anywhere on Oct. 6 to connect with over 300 investment advisors and learn how bitcoin, ethereum and other digital assets can successfully impact your clients' portfolios. Apply today.
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Latest Headlines
- The purely collateral-based type of lending practiced so far in decentralized finance has limitations. Reputation systems may widen the possibilities.
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Cardano Gains Smart Contract Capability Following 'Alonzo' Hard Fork
The latest upgrade ushers in an era of smart contract composability for the four-year-old network.
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South Korea's Registration Deadline for Crypto Exchanges Could Erase $2.6B in Assets: FT
The shutdown of two-thirds of the country's smaller exchanges could also eliminate 42 so-called kimchi coins, according to one expert.
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Former Ripple Execs to Launch Micropayments Platform to Tackle Transaction Fees
The pingNpay platform will utilize local currency backed stablecoins to power microtransactions at a fraction of the cost of typical debit card-based payments.
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Zero-Knowledge Credit Risk Platform X-Margin Raises $8M
Coinbase Ventures, HashKey Capital and Spartan Group were involved in the Series A round.
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Brevan Howard Appoints Former CMT Digital CEO Colleen Sullivan to Lead Crypto Investments
The hedge fund manager is also forming a new crypto-focused division called BH Digital.
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Ethereum Hashrate Reaches All-Time High
Computing power on the network has rebounded from China's mining crackdown as demand picks up.
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El Salvador to Exempt Foreign Investors From Tax on Bitcoin Profits: Report
The country is attempting to encourage foreign investment having adopted bitcoin as legal tender.
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Bitcoin Mining Power Consumption Exceeds 2020: Report
Miners are on track to have used 91TWh this year.
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E-Money's Stablecoins to Become Available on Algorand
Algorand will now support e-Money's range of stablecoins, including those pegged to the euro (eEUR), Swiss franc (eCHF) and Swedish krona (eSEK).
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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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