April 6, 2022

The latest moves in crypto markets, in context

Was this newsletter forwarded to you? Sign up here.

Supported by

Good morning, and welcome to First Mover – featuring a new look. Here's what's happening this morning:

Market Moves: Bitcoin drops as bond yields continue to rise. Technical charts signal more losses ahead. Luna Foundation Guard returned to the bitcoin market with a bang.
Featured Story: Metaverse majors struggle as user base falls short of market expectations.

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.

Damanick Dantes, markets reporter, CoinDesk
Scott Freeman, partner and co-founder, JST Capital
James Czerniawski, senior tech and innovation policy analyst, Americans for Prosperity

Bilal Hafeez, founder and CEO, Macro Hive

Today's newsletter was edited by Omkar Godbole and produced by Parikshit Mishra. Let us know what you think by replying to this email.

Market Moves

By Omkar Godbole

It's dip buyers versus adverse macro factors in the crypto market today.

After a brief hiatus, Luna Foundation Guard (LFG), a non-profit organization mandated to build reserves supporting smart contract blockchain Terra's dollar-pegged stablecoin UST, returned to the bitcoin market with a bang.

The foundation snapped up more than 5,000 BTC worth $230 million early Wednesday. That's more than business-intelligence software company MicroStrategy's purchases of 4,167 BTC between Feb. 15 and April 4.

Still, bitcoin traded weak as the relentless uptick in the U.S. government bond yields triggered renewed risk aversion in stock markets. MicroStrategy persistently bought the dip in the final quarter of 2021, but that didn't stop or slow down cryptocurrency's the-then bearish trend. Bitcoin nosedived from $68,000 to $32,000 in three months to late February, predominantly on hawkish Fed fears.

The crypto Twitter is optimistic that LFG's continued purchases to build a $10 billion bitcoin reserve eventually would help the cryptocurrency decouple from traditional markets this time. The belief perhaps stems from LFG buying bitcoin in large quantities compared to MicroStrategy's past purchases. Only time will tell if LFG saves bitcoin from worsening of macro conditions, if any.

According to some observers, bitcoin's next leg higher would resume once the real or inflation-adjusted yields stop rising. The U.S. 10-year real yield has risen over 60 basis points in four weeks to hit a two-year high.

The Fed is scheduled to release the minutes of the March policy meeting on April 6. The CME Group FedWatch Tool points to a more-than-70% probability of a 50 basis points (bps) rate hike in May. The central bank raised rates by a quarter percentage point last month.

"Now risk aversion is gradually rising, and the dollar index has reached its year-to-date highest level," Griffin Ardern, a volatility trader from crypto-asset management company Blofin, said. "The liquidity contraction may be accelerating. At 2 p.m. ET, details of the March FOMC meeting will be announced."

"In case the minutes show that policymakers considered a bigger rate increase but ended up voting for a 25 bps one to avoid a big market reaction, U.S. Treasury bond yields could continue to rise and provide a boost to the dollar," FXStreet's Eren Sengezer noted. "Market participants will also pay close attention to details surrounding the Fed's plan to shrink the balance sheet."

Bitcoin's charts hint at a deeper pullback

Bitcoin's hourly and daily charts. (TradingView.)

The hourly chart (above left) shows the cryptocurrency has dived out of a narrowing price range.

The daily chart relative strength index has breached the ascending trendline and the MACD histogram has crossed into bearish territory under zero.

So, support at $41,780 identified by the 50-day average stands exposed. On the higher side, the 200-day average at $48,266 is the level to beat for the bulls.

Investors, you deserve a Spot Bitcoin ETF

Since its inception in 2013, Grayscale has never stopped working towards converting Grayscale Bitcoin Trust (symbol: GBTC) to a Bitcoin ETF. If you support the conversion, write to the SEC by clicking here.

Your submission matters because:

We can level the playing field. To date, the SEC has only permitted Bitcoin Futures ETFs, while rejecting "physically-backed" or Spot Bitcoin ETFs.

The choice should be yours. If you've been waiting for the familiarity and protections of a Bitcoin ETF, we believe you should not be forced into a Futures-based product simply because it's the only one that exists.

You can help take GBTC to the next level, conversion to an ETF. It's already the world's largest Bitcoin fund and regularly reports to the SEC on a voluntary basis as an SEC-reporting company.

Learn more here.

This information should not be relied upon as investment advice or a recommendation regarding any security. Visit here for important disclosures.

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
Dogecoin	DOGE	+0.8%	Currency

Biggest Losers:

Asset	Ticker	Returns	Sector
Ethereum Classic	ETC	−11.1%	Smart Contract Platform
Internet Computer	ICP	−11.0%	Computing
Algorand	ALGO	−10.2%	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.

We're Cross River Crypto. We partner with today's most innovative crypto companies to offer banking solutions, including fiat on/off ramps.

Whether you are building a crypto exchange, an NFT marketplace, or metaverse, Cross River provides an API-based all-in-one platform that enables:

Banking-as-a-Service
ACH & Wire transfers
Push-to-Card Disbursements
Real-Time Payments
Virtual Accounts & Subledgers

Building the next big thing in crypto? Request your fiat on/off ramp solution now.

Latest Headlines

Metaverse Majors Struggle

By Sam Reynolds

The metaverse, despite all the interest from venture capital and the world's major brands, is struggling to attract users, and token prices have begun to reflect this. Tokens for the three major metaverse protocols, Decentraland, Axie Infinity and The Sandbox are all down year-to-date, and significantly underperforming bitcoin.

While all three have seen significant interest from venture capitalists, who have allocated hundreds of millions to metaverse and GameFi, some market observers say the number of daily active users (DAU) doesn't reflect the level of investment.

"There is currently no organic engagement that retains players in the game – unlike traditional games like Fortnite, GTA, Candy Crush – where players are willing to pay to keep playing," Web 3 analyst DeFi Vader wrote in an August 2021 note about Axie Infinity. "If one or a few of those games create organic engagement, then DAU growth may stop being mostly dependent on daily earnings."

Read The Full Story Here: Metaverse Majors Struggle as User Base Falls Short of Market Expectations

Introducing Market Wrap, our daily newsletter that explains what happened today in the crypto markets — and why. Sign up to get it in your inbox each weekday.

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.