Bitcoin rises again after moderate remarks from the head of the US central bank

Good morning. Here’s what happens:

Prices: Crypto markets and other assets enjoyed the sound of a more moderate approach to US monetary policy, as Fed Chair Jerome Powell suggested the central bank would raise interest rates by just 50 basis points.

Insight: Blockchain-based enterprise software has not been the success the industry expected.

Prices

CoinDesk Market Index (CMI)

870.95

+3.9 ▲ 0.5%

Bitcoin (BTC)

$17,158

+229.6 ▲ 1.4%

Ethereum (ETH)

$1290

+18.6 ▲ 1.5%

S&P 500 daily close

4,080.11

+122.5 ▲ 3.1%

Gold

$1788

+40.0 ▲ 2.3%

Treasury Yield 10 years

3.7%

▼ 0.0

BTC/ETH prices per CoinDesk indices; gold is the COMEX spot price. Prices from approximately 4:00 PM ET

Fed Chair’s moderate remarks send cryptos higher

By James Rubin

US Federal Reserve Chairman Jerome Powell was not exactly dovish in a speech on Wednesday, but his suggestion that the Fed could live with a more moderate rate hike at its mid-December meeting sent cryptocurrency prices higher, not to mention other assets.

Bitcoin recently traded above $17,150, up 1.4% in the last 24 hours, and its third consecutive day of gains. The biggest cryptocurrency by market capitalization had started to rise on Monday amid investors’ hopes that Powell and other Fed officials have found reassurance in economic indicators that show inflation and the threat of a hard recession are easing. BTC dipped below $15,500 two weeks ago as markets chewed on Genesis Global Capital’s decision to halt withdrawals, part of the fallout from crypto exchange giant FTX’s implosion.

Bilal Little, president of DFD Partners, told CoinDesk TV’s First Mover Program that this week’s rally also reflected a price reordering that often follows periods of distress. “Any time you have an episodic event, markets tend to oversold, and what also happens is you see the immediate look of contagion, and everyone starts pointing fingers. As the markets gain more clarity, you see that the fair market value comes back in line.”

The story continues

Ether recently changed hands above $1,290, up 1.5% from Tuesday at the same time. Other major altcoins were largely in the green with MATIC, the ticker of layer 2 scaler Polygon, rising more than 5%. Popular meme coin DOGE bucked the trend, falling more than 3% after rising around 50% over the past eight days. DOGE is trading well above $0.10 cents.

Prices moved slightly late Wednesday, apparently unimpressed by former FTX CEO Sam Bankman-Fried’s latest non-confessions in a live New York Times interview about the missteps that led to FTX’s Nov. 11 filing for Chapter 11 bankruptcy protection. Bankman-Fried spoke in general, often looking down at the floor as Times uber-reporter Andrew Ross Sorkin peppered him with questions. “I never tried to commit fraud,” Bankman-Fried said at one point.

Cryptos’ gains were small compared to equity markets, which rallied after Powell’s remarks at the Hutchins Center on Fiscal and Monetary Policy in Washington DC that the Fed was likely to raise interest rates by 50 basis points (BPS) rather than continuing its recent diet of 75 bps increases . Investors were also encouraged by US third-quarter GDP, which grew 2.9%, up from the Commerce Department’s initial estimate of 2.6%.

DFD Partners’ Little was pessimistic about crypto prices continuing to climb, saying bitcoin would likely drop to the $12,000 to $13,000 level before topping $22,000, a level it last reached in October. “It’s going to be on the back of what are the other contagion impacts, around this particular event, FTX,” he said. “Different providers will struggle to not only meet liquidity requirements, but also counterparty risk.”

Biggest winners

Biggest losers

Insight

The failure of blockchain-based enterprise software

By Sam Reynolds

Rewind to the last crypto bear market, and the “corporate blockchain” narrative fueled the rally. Although this internet fun money was subject to booms and busts, the programmability of blockchain technology was meant to unlock trillions of dollars of real value. After all, Beijing had identified it as a strategic technology.

But despite the $3.1 trillion in unlocked value that Gartner promised by 2030, industry use cases for blockchain continue to disappear.

Recently, Maersk and IBM announced that TradeLens, the blockchain-based transparent ledger that was supposed to improve shipping processing and customs clearance, will be discontinued in 2023.

“TradeLens has not reached the level of commercial viability necessary to continue operations and meet financial expectations as an independent business,” Rotem Hershko, head of business platforms at Maersk, said in a statement.

Keywords: commercial viability. This seems to be the theme with enterprise blockchain applications. Managers are not able to figure out why we need this unlike more traditional database technology.

Earlier this month, the Australian Securities Exchange (ASX) said it was canceling a planned blockchain-based upgrade to its clearinghouse system. The existing system was performing well enough, and executives at the exchange could not justify spending on a system upgrade that might not do much more than its predecessor.

Amazon: Why Blockchain?

Tim Bray, one of the godfathers of web software development, offers an anecdote about all this on his blog. blog.. Until early 2020, Bray was a vice president at Amazon Web Services (AWS) before stepping down as a high-profile defector, criticizing Amazon for its “vein of toxicity”.

In 2016, supposedly during happier times in his career at the company, Bray was in a meeting with Andy Jassy, ​​then CEO of AWS, and the topic was blockchain. Bray writes (the whole post is worth reading) that Jassy heard from his customers that AWS needed a blockchain strategy. But Jassy could not understand why blockchain was necessary when existing tools provided adequate solutions.

AWS was already making a ton of money from blockchain. Many of the world’s crypto exchanges or other infrastructure projects host their products on the platform (see: $4.6 million AWS bill to Alameda/FTX). But this is different from what the world’s industrial and commercial giants were told they wanted. They needed to integrate blockchain, investors said, and it was up to AWS to implement this.

“I can’t remember the details of how our findings got back to Andy. They were of the form ‘Ledgers are useful, cryptography technology is useful, blockchains are not, the field is full of grifters, but we could build distributed ledger infrastructure and then these cool services on top of that,” Bray wrote. “I’m not prepared to say that no blockchain-based system will ever be useful for anything. But I’m going to be negative until I see one at work that actually does something useful, without tall-go-up greed that squeezes the teats.”

AWS still has a blockchain segment, and is said to be preparing to double China, the only market where enterprise blockchain continues to exist at scale due to government dictates (where’s the on-chain data?).

Meanwhile, its competitor, Microsoft Azure, has shut down its cloud blockchain services. As CoinDesk reported last year, IBM’s blockchain division is a “shell of its former self.”

Bray noted in his post that it was not AWS’s role to “determine market realities.” They had to build what the customer wanted. Jaffy, the manager in charge of the division, was “possibly the world’s most skilled person at listening to people talk about Enterprise IT problems and the tools needed to fix them,” and if he couldn’t see the value of this technology, it probably was not worth anyone’s time.

But at the time, if you questioned the technology, you were a “peasant,” as Bray noted, because all the “serious enterprises full of serious people” were adopting blockchain.

And now those who did are leaving.

Let’s just admit it was all a failure.

Important events.

15:00 HKT/SGT (7:00 UTC) Germany’s retail sales (year/Oct)

21:30 HKT/SGT (13:30 UTC) Speech by Bank of Japan Governor Kuroda

23:00 HKT/SGT (15:00 UTC) US ISM Manufacturing PMI (Nov.)

CoinDesk TV

In case you missed it, here’s the latest episode of “First Mover” on CoinDesk TV:

Bitcoin Rises Towards $17K; BlockFi has $355 million in Crypto Frozen on FTX

Crypto lender BlockFi has about $355 million in cryptocurrencies currently frozen on defunct crypto exchange FTX. CoinDesk’s Nikhilesh De discussed the latest developments uncovered during BlockFi’s first day in bankruptcy court. Howard Fischer, former SEC senior litigation counsel and current partner at Moses Singer, shared his thoughts on the lawsuit. In addition, former AAX Vice President Ben Caselin, who has resigned amid the crypto exchange’s withdrawal halt, joined the conversation. And a crypto market analysis with Bilal Little of DFD Partners.

Headings

Telegram CEO Durov plans to build crypto wallets, decentralized exchange: The messaging app is moving forward with its development of crypto infrastructure.

Bitcoin correlation with the dollar index turns negative, again: Asset managers reduced long positions in BTC for a third week in a row.

Kraken cuts 30% of workforce amid crypto winter: The crypto exchange is laying off 1,100, after saying it was in hiring mode earlier this year.

Near Foundation joins Processed Foods giant Grupo Nutresa to unveil Web3 loyalty program in Latin America: It is the first open source loyalty program using the Near protocol and aims to reach one million consumers across the region.

Bitcoin Custody Firm Casa Adds Ethereum Support: The addition is part of a larger overhaul of the Casa app, which will be relaunched in January.