  The latest moves in crypto markets, in context January 20, 2022 Sponsored by  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:
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Today's newsletter was edited by Omkar Godbole.
Market Moves The crypto market looked poised for a recovery rally, with an uptick in U.S. stock futures early Thursday helping bitcoin stay mildly bid in the wake of Russia's central bank suggesting a blanket ban on all digital assets-related activities.
The tough talk comes as escalating geopolitical tensions between Russia and the West threaten to inject volatility into the rouble's exchange rate, which, in turn, may encourage Russians to take the crypto route.
Bitcoin's implied volatility tanks
The one-month implied volatility, which reflects investors' expectations for price turbulence over the next four weeks, has dropped to an annualized 58.9%, the lowest since November 2020, according to data provided by derivatives research firm Skew.
The metric has come off sharply from 85% since mid-December, at least in part due to the growing investor participation in the weekly tied to bitcoin, ether and altcoins "covered call/put" strategies offered by decentralized finance (DeFi) asset management platforms, including Ribbon Finance and StakeDAO.
"New DeFi innovations may contribute to lowering the implied volatility. Structural volatility sellers have emerged from DeFi Options Vaults. These vaults perpetually employ their allocated capital to sell covered calls and cash-secured put," Arcane Research's weekly note published Tuesday said.
In simple words, traders or market makers buying options from DeFi vaults have been hedging their exposure by selling options on centralized exchanges, in turn driving the implied volatility lower.
Implied volatility is influenced by demand for options (call and put).
Big move ahead?
Implied volatility typically mean-reverts – goes back toward its historical average. So with the one-month gauge currently hovering well below its lifetime average of 76%, some observers are calling a volatility explosion – a big move on either side.
Seasoned traders typically buy both calls and put options when expecting a surge in volatility. That said, periods of low volatility can last longer, yielding losses for option buyers.
El Salvador's CDS surges
When El Salvador adopted bitcoin as legal tender in September, the move received a rapturous reception from the crypto community, with many predicting a change in the debt-ridden nation's fortunes.
Five months later, the country's sovereign credit perception in global bond markets is four times worse than it was.
Salvador's five-year credit default swap (CDS) has more than quadrupled to $1,800 since early September, according to Bloomberg data shared with CoinDesk by Marc Ostwald, the chief economist and global strategist at ADM Investor Services International (ADMISI). Credit default swaps measure the cost of insuring against a country defaulting on borrowing repayments at any time in a specified period – so a rising CDS price implies that traders see a borrower's creditworthiness as deteriorating.
"Salvador's CDS is telling you a default is expected at some point," Charlie Morris, CIO at ByteTree Asset Management, said. As of Wednesday, the nation's CDS price was the second-highest in Latin America, behind Argentina.  Chart showing a surge in Salvador's five-year credit default swap (Source: Bloomberg) While several traditional market observers were quick to call out El Salvador's supposedly utopian decision to adopt bitcoin as legal tender and invest in the top cryptocurrency as the reason for the spike in the country's CDS, the U.S. Federal Reserve's hawkish turn also appears to have played a role.
Read the full story here: The 3 Reasons Behind Bitcoin-Holder El Salvador's Deteriorating Creditworthiness
A Message from CME  Step into Ether futures with a micro-sized contract
Crypto Prices Bitcoin (BTC) See the latest price here Ether (ETH) See the latest price here The following are the biggest movers in the CoinDesk 20 digital assets over the past 24 hours: Biggest Gainers:
Biggest Losers:
Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.
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 New Money, a new series by CoinDesk, explores what it means to be part of the new "creator economy." In the talk show hosted by Spencer Dinwiddie and Solo Ceesay, we hear from pro athletes, celebrities and social media influencers who are on the cutting edge of interacting directly with fans and developing new ways to generate revenue from their own celebrity. Learn more here.
Technician's Take By Omkar Godbole Bitcoin's monthly chart leans bearish  Bitcoin's monthly chart with MACD histogram (Source: TradingView) Bitcoin's monthly chart moving average convergence divergence (MACD) histogram is about to cross below zero, confirming a bearish trend reversal.
ICYMI In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:
"First Mover" hosts are joined by Osprey Funds Founder and CEO Greg King and eToro U.S. Managing Director Guy Hirsch for a look at today's crypto markets and key trends to watch in 2022.
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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