July 12, 2022

The latest moves in crypto markets, in context

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Good morning, and welcome to First Mover. I'm Lyllah Ledesma, here to take you through the latest in crypto markets, news and insights.

Price Point: BTC dips below $20K, open interest moves upward and more on the unfolding of crypto hedge fund Three Arrows Capital.
Market Moves: Omkar Godbole looks at how bitcoin's fortunes are more closely tied to the U.S. real or inflation-adjusted bond yield than ever.

Price Point

Bitcoin (BTC) was trading down 5% on the day, dipping below the $20,000 mark as a sell-off in traditional markets saw equity indexes decline.

If BTC holds the $20,000 support, it should soon be back at $25,000 (resistance), according to Matteo Bottacini, trader at Crypto Finance AG.

"Otherwise, the price is likely range bounded again between $18,500 and $21,000," wrote Bottacini in a note Tuesday.

The dollar rallied against all major developed-market economies and the euro slipped closer to parity against the greenback on recession concerns.

Ether (ETH), fell by 7.8% over the last 24-hours and is back to trading around $1,000. The cryptocurrency reached highs of $1,250 over the weekend.

In the derivatives market, the amount of open bitcoin and ether perpetual futures contracts have recovered slightly this month, after dropping double digits in June, according to data from Kaiko.

Perpetual Futures Open Interest. (Kaiko)

Bitcoin perpetual futures open interest rose 11% to $6 billion since the start of this month. Kaiko research notes that this is partly supported by a 7.6% increase in prices. Ether's open interest rose at a slower pace of 7% to around $3 billion.

The increase was mainly driven by rising open positions on the two largest derivatives exchanges, FTX and Binance, according to Kaiko.

Meanwhile, BitMEX, crypto futures and spot exchange, announced today it has delayed listing its Ethereum-based BMEX token because of current market conditions.

"We have made the decision to postpone the listing of the BMEX Token on our spot exchange," it said. "The reason is quite simple. Although we are ready to list BMEX, the present market conditions are not ideal, and we want to list the token in an environment that gives it the best chance to reward you, its holders."

In other news, Sam Reynolds reported that Three Arrows Capital co-founder Su Zhu broke his Twitter silence Tuesday by posting screenshots of an email sent from his legal counsel to legal representatives of Three Arrows' liquidators, alleging they are "baiting" Zhu and co-founder Kyle Davies and ignoring their attempts to work with them in good faith.

According to a report from Reuters, cryptocurrency exchange Binance failed to deliver on money-laundering prevention promises. Binance operated outside the rules that many rival firms follow, while being ambiguous over the jurisdiction in which the main business is located, the news organization said.

And finally, Celsius Network, the troubled crypto lender, paid down $95 million of its debt to the Aave and Compound decentralized finance (DeFi) platforms.

Bitcoin (BTC)

See the latest price here

Ether (ETH)

See the latest price here

Market Moves

By Omkar Godble

Bitcoin's Inverse Correlation With Inflation-Adjusted Bond Yield Hits Record High

Bitcoin's fortunes are more closely tied to the U.S. real or inflation-adjusted bond yield than ever, with the two increasingly moving in opposite directions.

At press time, the 90-day correlation coefficient between bitcoin and the yield on the 10-year U.S. inflation-indexed security stood just shy of the record -0.95 reached at the end of June.

The record inverse or negative correlation means bitcoin is moving in the opposite direction of the inflation-adjusted yield. A correlation coefficient is a number between +1 and -1, representing the linear interdependence of two variables or sets of data. If the correlation coefficient is -1, it means relationship between the two variables is negative 100% of the time. If the number is at +1, the two securities move in the same direction.

A positive real yield means the bond payout is exceeding the market-based measures of inflation expectations. Therefore, the higher the real yield, the lesser the incentive to chase returns from other assets like cryptocurrencies, stocks and gold.

So, it's no surprise that bitcoin, technology stocks and gold have taken a beating this year alongside an uptick in the real yield. The real yield has surged by more than 172 basis points to 1.72% this year, thanks to Federal Reserve's resolve to drain liquidity with rapid-fire interest rate hikes and balance sheet run-off to fight rampant inflation. While the leading cryptocurrency has dropped nearly 57%, the tech-heavy Nasdaq index and gold are nursing a 27% and 5.2% loss, respectively.

The record negative correlation means the possibility of bitcoin plunging below the June low of $17,601 cannot be ruled out should the real yield continue to rise. And to the dismay of bulls cheering the bottom signals on blockchain indicators, the path of least resistance for the real yield appears to be on the higher side. That's because, inflation is showing no signs of slowing down and the Fed is unlikely to apply brakes to policy tightening anytime soon.

Read the full story here: Bitcoin's Inverse Correlation With Inflation-Adjusted Bond Yield Hits Record High

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Crypto Prices

The following are the biggest movers in the CoinDesk 20 digital assets over the past 24 hours:

Biggest Gainers

Asset	Ticker	Returns	DACS Sector
Polygon	MATIC	+2.8%	Smart Contract Platform
Loopring	LRC	+2.4%	Smart Contract Platform

Biggest Losers

Asset	Ticker	Returns	DACS Sector
Terra	LUNA	−9.2%	Smart Contract Platform
Cosmos	ATOM	−8.4%	Smart Contract Platform
Ethereum	ETH	−6.6%	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

Policy Makers Should Get On With Regulating Crypto, BOE's Cunliffe Says
The Bank of England's deputy governor said regulators should accelerate crypto rulemaking, and if certain risks involving crypto can't be managed, related activities must be stopped.
Uniswap User Loses $8M Worth of Ether in Phishing Attack
The attacker enticed users with a fake Uniswap airdrop message.
Bitcoin Drops to $19.7K as Recession Concerns Weigh on Financial Markets, Euro Nears Dollar Parity
Singapore's state-owned investor Temasek said it sees more broader-market declines in the coming months.
Brazilian Fintech PicPay to Launch Crypto Exchange, Real-Tied Stablecoin
The company, which has 30 million active users, will offer bitcoin, ether and USDP trading.

What to watch:

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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.