Bitcoin Now Below $19K as Merge-Fueled Ethereum Classic Hype Unwinds

Sept, 7, 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. I'm Lyllah Ledesma here to take you through the latest in crypto markets, news and insights.

In today's newsletter:

Price Point: Bitcoin approaches 2022 lows, sliding below $19K for the first time in months, as fears of hawkish Federal Reserve monetary policy continue to haunt traditional markets.
Market Moves: Even in a bear market, bitcoin's share of the overall crypto market capitalization is shrinking.

Price Point

Bitcoin (BTC) was trading below the $19,000 threshold on Wednesday, down 6%, approaching this year's lows. The world's largest cryptocurrency by market value lost $1,000 in around four hours.

There was a mixed mood in markets. Futures tied to all three major U.S. stock indexes ticked up after two days of losses and European stocks were lower as the energy crisis prevailed in the region with skyrocketing natural gas prices.

Florian Giovannacci, head of trading at Covario AG, expects bitcoin's weakness to continue in the mid to short term as he sees the energy crisis to be the leading topic for the next few months. "Right now it is really hard for investors to estimate the full impact on inflation and economic activity in general," said Giovannacci in an interview with CoinDesk.

"A lot of uncertainty is creating a very risk-off sentiment, where the first assets to be hit are high risk assets such as crypto."

According to data from CoinShares, bitcoin investment products saw redemptions totalling $11 million last week, representing a fourth consecutive week of outflows. However, short-bitcoin investment products saw a record $18 million inflows last week.

Ether (ETH), which had a considerably better day than bitcoin Tuesday, appeared to be making up the difference on Wednesday: It was trading down 10% over the last 24 hours.

The token for Ethereum Classic, seen as a possible destination after Ethereum's Merge for crypto miners who want to stay on a proof-of-work blockchain, tumbled 17% over the past 24 hours. The move almost completely wiped out big gains notched earlier in the week.

In the news, senior executive departures from Pantera Capital, a major cryptocurrency hedge fund and venture capital investor with $4.7 billion in assets, are wider than previously reported, according to people familiar with the matter.

Curve Finance, a prominent stablecoin swap application is nearing the launch of its native stablecoin, dubbed crvUSD, as per the initial code released by its developers on Tuesday.

With nearly a decade-long track record of being the world's largest digital currency asset manager, Grayscale is an industry leader in offering investors secure and regulated access to crypto.

Grayscale brought the world's first publicly-traded Bitcoin investment fund, GBTC, to market, and have since expanded our full product suite to 17 products total, including both single-asset funds as well as diversified funds that cover industry themes such as the metaverse, privacy, and data.

Grayscale is committed to the crypto economy and our investors. This includes working closely with regulators, selecting best-in-class service providers, and collaborating with industry participants to discover and bring to market exciting new products.

Learn more about Grayscale here. Investing involves risks and the possible loss of principal.

Market Moves

By Lyllah Ledesma, Omkar Godbole

Bitcoin dominance reaches lowest point since January

With investors' eyes on ether as the Merge approaches, bitcoin's dominance has dropped to levels not seen since January.

Bitcoin's dominance rate, or the leading cryptocurrency's share in the broader market, declined to 39.22% early Wednesday, the lowest since January 16, according to charting platform TradingView.

BTC's dominance could bounce, as pointed out by Scott Melker, popularly known as The Wolf Of All Streets. The question is whether the impending rise in BTC's dominance will stem from a market-wide collapse or a continued ether outperformance.

ETH vs BTC reaches new high

The price ratio between ether and bitcoin - tickerized as ETHBTC – is currently trading at 0.0839, a new yearly high. Last year, ether traded above the current level versus bitcoin on nine occasions, emphasizing that ether is trading at rare highs versus bitcoin, according to Arcane Research. "This shows the strength of the Merge narrative in the market," said Arcane.

Crypto Prices

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

Biggest Gainers

There are no gainers in CoinDesk 20 today.

Biggest Losers

Asset	Ticker	Returns	DACS Sector
Terra	LUNA	−12.2%	Smart Contract Platform
Polygon	MATIC	−10.2%	Smart Contract Platform
Loopring	LRC	−9.2%	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.

Latest Headlines

Staked Ether Price Discount Widens to Most Since June Ahead of Ethereum Merge
The discount in Lido's staked ether is widening, perhaps due to holders switching to ETH ahead of the Merge.
Ether, Cardano Lead Steep Crypto Slide Amid Dollar Strength: Some analysts said impending monetary tightening could add to a global rout across major asset classes such as equities and crypto.
DeFi Platform Curve Finance Takes First Steps Toward crvUSD Stablecoin: Details on the actual usage of crvUSD are scarce at writing time, and Curve developers declined to share more information about the tokens with CoinDesk.
Crypto Exchange KuCoin Highlights Flaws in DeFi Platform Acala's Post-Exploit Proposal: The exchange has pinpointed several mistakes in the platform's data on erroneously issued stablecoins.
Blockchain Australia Lands Former BlackRock Director as New CEO:aura Mercurio has previously worked with BlackRock, Merrill Lynch, and Deutsche Bank.
Thai SEC Files Police Complaint Against Crypto Exchange Zipmex: The complaint comes after Zipmex failed to meet a deadline for sharing transactional information with the SEC, the agency said.
Ethereum Merge: What You Need to Know: Our FAQ on the blockchain's coming overhaul.

What to watch:

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.

Laura Shin, "The Cryptopians" author, host of "Unchained" podcast
Noah Hamman, CEO, AdvisorShares
Jeremy Sheridan, VP of regulatory affairs, Prime Trust

Which institutes are most impacting the blockchain world? Tell us your thoughts in a five-minute survey. We're welcoming responses until Sept. 7. Take the survey here.

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.