  The latest moves in crypto markets, in context January 19, 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 Bitcoin options traders are growing more bearish.
Bitcoin's risk reversals – measuring the difference between put- and call-option prices – have flipped positive, an indication of increased demand among traders for downside protection. The shift might be a signal of renewed market weakness over one-week, one-, three- and six-month periods. Investors typically buy puts to hedge against a potential price slide.
Lingering Fed rate hike fears and persistent risk-off in traditional markets seem to be drawing demand for downside bets. Early Wednesday, Anna Wong, chief U.S. economist for Bloomberg Economics, said that a 50-basis point (bps) interest rate hike is warranted at the Fed's March meeting, according to FXStreet. The Fed funds futures are currently pricing a 93% chance of the central bank raising rates by 25 basis points in March.
Ether's put-call skews have also flipped bearish, with puts drawing relatively higher prices than calls.
Bitcoin traded 0.5% lower at $42,100 at press time, having printed lows under $41,200 early Wednesday. The cryptocurrency's options market had turned neutral last week in a sign of dwindling concerns of an extended decline below $40,000.
Ether changed hands at $3,120, for a 1% drop on the day. Scaling solution Polygon's MATIC token fell 6% even as the network implemented Ethereum's fee-burning mechanism, which will destroy MATIC tokens making its supply deflationary. Solana's token SOL, binance token BNB, and ether each fell over 2%.
Programmable blockchain Cardano's ADA token traded lower in a move typical of a correction often seen after a notable price rally. The token jumped nearly 60% to $1.64 earlier this month, outperforming bitcoin as the impending launch of SundaeSwap, the first decentralized finance (DeFi) exchange on the Cardano blockchain, revved up investor interest in the cryptocurrency.
Cardano is likely to be in the news in the coming weeks. "Keep eyes on the various scaling initiatives coming to Cardano the next months," pseudonymous Twitter-based ADA whale told CoinDesk in a Twitter chat. "Cardano Chain is currently running at pretty much full capacity, block size likely increases by the end of the month, next month will see the Babbage hard fork, which helps things further."
"Transactions per second should scale to 500-1,000 this year in various ways," ADA whale added.
While these impending developments can put a fresh bid under ADA, the cryptocurrency remains vulnerable to a continued sell-off in bitcoin, if any.
Here comes the Squeeth
Last week, the decentralized options protocol Opyn launched an ether derivative contract linked to a new index called Squeeth – a word play on "squared-ether." The index tracks ether's price change, raised to the power of two. It takes leverage to the exponential degree.
The basic purpose of the new tool is to give traders exposure similar to the highly leveraged bets they could get from trading options, but without the need to set strike prices or determine contract expiration dates, according to a Jan. 9 blog post by Wade Prospere, head of marketing and community at Opyn.
Holders of Squeeth will make more when ETH goes up and lose less when ETH goes down.
Say a trader purchases $1,000 worth of the Squeeth tokens. If the price of ether triples from $3,000 to $9,000, the Squeeth would go up triple-squared, or 9-fold – to $9,000 in this example. On the contrary, if ether halves to $1,500, Squeeth will see a less-than-linear decline, as represented by the curved payoff line below:  Squeeth payoff vs 2-x leverage payoff (Source: Open) However, there is no free lunch in finance and high reward is usually accompanied by high cost/risk.
A key drawback with Squeeth is that its funding rates – the cost of holding long positions – are expected to be higher than a 2x leveraged position due to the product's exposure to pure convexity. The constant funding bleed from the long position results in the oSQTH's underperformance relative to the Squeeth index.
Read the full story here: Opyn's New 'Squeeth' Raises Ether Trading to the Power of Two
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 Loopring's LRC Holds 200-day MA Support  LRC's daily chart with 200-day moving average (Source: TradingView) LRC's defense of the widely-tracked 200-day moving average (MA) line, coupled with the bullish divergence of the 4-hour chart relative strength index, signals a corrective rally ahead.
ICYMI In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:
Former Acting Comptroller of the Currency and current Bitfury CEO Brian Brooks joins "First Mover" to discuss the U.S. stablecoin regulations. Meanwhile, FTX announces a $2 billion venture fund to invest in crypto industry startups. FTX Ventures Lead Amy Wu shares details from behind the scene. Bitcoin is down along with stock futures. OANDA Senior Market Analyst Edward Moya provides his market analysis. Plus, a regulatory update from CoinDesk Managing Editor for Global Policy & Regulation Nikhilesh De.
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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