Bitcoin's Price Bounce Stalls as 10-year Yield Hits 32-Month High

The latest moves in crypto markets, in context

March 14, 2022

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Good morning, and welcome to First Mover. Here's what's happening this morning:

Market Moves: Bitcoin sees early bounce to $39,000. U.S. 10-year yield hits highest since July 2019.
Featured stories: Bitcoin's put-call skews pull back from February highs. Ether awaits a triangle breakout.

And check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9:00 a.m. U.S. Eastern time. Today's show will feature guests:

Kevin O'Leary, chairman of O'Shares ETFs Chairman and 'Shark Tank' Co-Host
Jeff Mei, Director of Global Strategy, Huobi Global
Bradley Tusk, founder and CEO, Tusk Strategies

Today's newsletter was edited by Omkar Godbole and produced by Parikshit Mishra.

Market Moves

By Omkar Godbole

Bitcoin's bounce from key price support stalled near $39,000 ahead of American trading hours, as the futures tied to the tech-heavy Nasdaq 100 index erased 1% gain and dipped into the red. Meanwhile, the yield on the U.S. 10-year Treasury note rose to 2.10%, the highest since July 2019, according to the chart platform TradingView.

The benchmark yield has risen by 40 basis points in seven days and nearly 60 basis points this year. The U.S. 10-year breakeven inflation rate reached a record high of 2.785% last week, per Federal Reserve Bank of St. Louis.

Historically, bitcoin has chalked up price rallies in an environment of rising inflation expectations and bond yields, according to Charlie Morris, CIO at ByteTree Asset Management.

However, dollar strength has emerged as one of bitcoin's critical nemesis since the March 2020 crash and seems to be stopping the crypto from taking advantage of the ongoing rise in bond yields. The dollar index, which tracks the greenback's value against majors, stood just under 99.0, having hit a 22-month high of 99.42 last week.

"If the dollar starts to ease, higher [bitcoin] prices will follow," ByteTree's Morris tweeted. A big dollar sell-off looks unlikely during the next 48 hours as the Federal Reserve is expected to hike rates by 25 basis points on Wednesday.

Aside from the macro stuff, traders will closely watch the European Union's (EU) vote on a draft of the proposed Markets in Crypto Assets (MiCA) framework, which could have widespread ramifications.

"The bill as it is currently framed would require miners to submit environmental sustainability compliance plans. Failing to submit them would prevent their operation within the EU. The implications of this are huge – the EU is a major jurisdiction for crypto mining and crypto more generally, with over 10% of global bitcoin hash power emanating from the region," Simon Peters, market analyst at eToro, said in an email.

"While not on the scale of the China bitcoin mining ban, the implication for the price of BTC and other crypto assets which follow on price, could be significant in the next few days. The crypto asset market has been buffeted by events and this could lead to another tough trading period if the legislation passes," Peters added.

Bitcoin defended the weekly Ichimoku cloud support during the Asian hours even as a deteriorating coronavirus outbreak in mainland China pushed Hong Kong's stock index to a six-year low.

A tweet by Tesla's CEO Elon Musk that he won't sell bitcoin, ether and dogecoin likely helped the top cryptocurrency remain resilient to sell-off in the Hong Kong stocks. The meme cryptocurrency dogecoin also witnessed a 10% spike, supposedly on Musk's tweet.

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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:

Asset	Ticker	Returns	Sector
Cardano	ADA	+1.4%	Smart Contract Platform
Dogecoin	DOGE	+1.3%	Currency
Ethereum	ETH	+1.0%	Smart Contract Platform

Biggest Losers:

Asset	Ticker	Returns	Sector
Stellar	XLM	−3.7%	Smart Contract Platform
XRP	XRP	−2.7%	Currency
Polygon	MATIC	−2.2%	Smart Contract Platform

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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Latest Headlines

Bitcoin's Put-Call Skews Pull Back, Ether's Triangular Consolidation Continues

By Omkar Godbole

Bitcoin's put-call skews have come off sharply from the highs seen following Russia's invasion of Ukraine on Feb. 24. It shows that demand for puts or options offering downside protection is now relatively weaker than two weeks ago.

In other words, fears of an extended decline have subsided, with bitcoin consolidating below $40,000 amid a continued decline in U.S. stocks.

The six-month put-call skew saw a brief dip below zero over the weekend, implying a relatively higher demand for longer duration calls or bullish bets.

According to the institution-focused over-the-counter tech platform Paradigm, calls dominated the volume last week, accounting for 67.7% of the options traded, with the majority activity concentrated at the March expiry $40,000 strike.

Bitcoin's put-call skews (Source: Skew)

A call option gives the purchaser the right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date. A put option purchaser gets the right to sell.

Put-call skews measure the implied volatility premium drawn by puts relative to calls.

Ether awaits range breakout

Ether has formed a contracting triangle identified by trendlines connecting Feb. 10 and March 2 highs and Jan. 24 and Feb. 24 lows.

A potential breakdown would perhaps imply a continuation of the broader downtrend.

Ether's daily chart (Source: TradingView)

ICYMI

In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:

Bitcoin Jumps to $40K as Putin Sees Positive Shift in Ukraine Talks, Russia Could Nationalize Western Businesses

Russian President Vladimir Putin sees "certain positive shifts" in talks with Ukraine. This comes as Ukraine continues to put up a strong resistance against Russia. Pavel Kravchenko, on the ground in Ukraine, a co-founder of crypto software firm Distributed Lab, joins "First Mover" to share the latest from that region. Timothy Massad, former CFTC chairman and Harvard University Kennedy School of Government Research Fellow weighs in on the impact of the economic warfare on Russia and Biden's crypto executive order on digital assets. Plus, crypto markets analysis from David Gan of OP Crypto.

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.