Crypto Trading Firm Amber CEO Claims Bitcoin Can Still Be an Inflation Hedge; Cryptos’ Surprising Backlash
Good morning. Here’s what happens:
Prices: Bitcoin and other major cryptos held the same range they had occupied before the latest inflation figures.
Insight: CEO of crypto trading firm Amber says there is no better asset to hold value than bitcoin.
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Prices
● CoinDesk Market Index (CMI): 949.89 +1.2%
● Bitcoin (BTC): $19,663 +2.9%
● Ether (ETH): $1322 +2.2%
● S&P 500 daily close: 3,669.91 +2.6%
● Gold: $1,666 per troy ounce -0.2%
● Ten-year Treasury yield daily close: 3.95% +0.05
Bitcoin, Ether and Gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the spot price for COMEX. Information on CoinDesk indices can be found at coindesk.com/indices.
Bitcoin’s Counterintuitive Rebound
By James Rubin
So much for conventional wisdom.
The long-awaited consumer price index (CPI) came in warmer than expected, the kind of reading that usually sends riskier assets spiraling downward.
Instead, bitcoin did the opposite on Thursday, recovering from an early stumble to regain its now-familiar perch above $19,000. The largest cryptocurrency by market capitalization, which was recently up more than 2% to trade above $19,600, has occupied a narrow band between $19,000 and $21,000 for much of the past month, hampered by concerns about runaway inflation and the growing prospect of a hard recession.
“What we saw today was the culmination of a month-long build-up of protective buying and build-up in implied and realized volatility,” Jon Campagna, head of trading and capital markets at crypto investment fund CoinFund, wrote to CoinDesk in an email.
Campagna noted the marked declines in bitcoin and ether one-day trading volumes from the previous night following the CPI report, and a “similar dynamic” in equity markets. “ViX (CBOE Volatility Index) actually fell 4.5%!” he wrote. “The CPI number was warm, but it was an expected warm level. This led to some relief as the put protection was sold and the books adjusted to slightly increase risk.”
The 8.2% CPI, up 0.1% from last month’s figure, and the 6.6% core inflation reading, which excludes volatile food and energy prices, provided the latest reminder of inflation’s stubbornness. Both measurements represented four-decade highs.
Ether and other major altcoins followed bitcoin’s Thursday pattern, plunging sharply before quickly recovering lost ground. The second largest crypto by market capitalization recently changed hands below $1,300, roughly flat from the same time on Wednesday. GALA and DOT were among the day’s big gainers, recently rising by more than 3% and 2% respectively. ADA decreased slightly. The CoinDesk Market Index (CMI)a broad-based market index that measures the performance of a basket of cryptocurrencies recently rose 0.52%.
Stock
Crypto prices matched stock markets, which also dipped early before rebounding with a vengeance with the tech-focused Nasdaq, S&P 500 and Dow Jones Industrial Average all climbing well above 2% to break six-day losing streaks that short-sellers can have done. appeared to be taking advantage of recent downturns. However, the underlying conditions that have worried markets remain in full force, and the US Federal Reserve is now even more likely than pre-CPI to stay on course for another rate hike of 75 basis points – or perhaps higher. Mortgage rates in the once fierce housing market are now at a two-decade high, close to 7%.
Meanwhile, at an Institute for International Finance (IIF) event on Wednesday, Jamie Dimon again called crypto tokens “decentralized Ponzis”, even as he praised aspects of blockchain technology. The JPMorgan chief has been among crypto’s most prominent critics, regularly voicing his concerns about security, even as his bank has been fined billions of dollars for its own regulatory violations.
In written comments to CoinDesk, Mark Connors, principal researcher at Canadian digital asset firm 3iQ, said today’s activity had not changed the recent economic and investment backdrop. “Lots of cross currents,” Connors wrote. “Nothing is resolved except that inflation is more persistent than expected.”
Connors optimistically added that bitcoin had been less volatile than the Nasdaq on Thursday. “That’s a significant difference, and one we think will persist as stocks fall.”
He added: “The recent outperformance of BTC and ETH in Q3 and today’s lower volatility profile is NOT an accident. The tourists are out of crypto, BTC is on the right side of the halving, crypto regulation is accelerating – critical to institutional adoption and equity risk is massive underrated.”
Biggest winners
Biggest losers
Insight
Crypto Trading Firm Amber CEO Says Bitcoin Can Still Be An Inflation Hedge
By Shaurya Malwa
Crypto markets have largely mirrored the downtrend in major equity indices, including last month’s sharp price corrections. .
Bitcoin and ether, the two largest cryptocurrencies by market capitalization, have fallen over 70% from their all-time highs in 2021. Solana has fallen over 85%. The steep declines have been in contrast to bitcoin and other cryptocurrencies’ supposed role as a hedge – like gold – against the real economy and popular financial instruments such as stocks or bonds.
Crypto stalwarts have recently begun to question bitcoin’s hedging role as more speculative than real. But some traders, including Michael Wu, the co-founder of crypto trading firm Amber, have countered that market dynamics explain the recent falling prices rather than buyer sentiment.
“It’s a bit early to say that crypto failed as an ‘investment hedge,'” Wu recently told CoinDesk. are also technology investors and had to reduce their portfolio across the board, rather than fundamental drivers.”
Wu added: “Bitcoin remains a better form of store of value than anything that has existed before, and Ethereum together with the decentralized digital economy on which it is built provides tremendous value as a technical infrastructure investment,” Wu said, stressing the “need” to be more patient” to see the value propositions of alternative currencies play out over the next few years or decades.
Wu and similar types of investors take a long-term approach to cryptocurrency investing that actively avoids chasing short-term movements, instead embracing a structural shift from traditional finance to the crypto ecosystem.
“If we zoom out beyond the short-term trading horizon that crypto people are too used to focus on and look at the long-term structural trends, we will see that the fundamental investment values of crypto as an asset class have been getting stronger and stronger over time,” Wu said.
Important events.
Devcon Bogota 2022
11:30 HKT/SGT(3:30 UTC) Export and Import Price Indices (Sept./Yyyy)
CoinDesk TV
In case you missed it, here’s the latest episode of “First Mover” on CoinDesk TV:
Bitcoin Falls After Hotter Than Expected Inflation Report; OCC head Hsu for banks’ crypto-related activities
The consumer price index (CPI) report for September showed that inflation was hotter than expected despite interest rate increases. Crypto markets were down across the board. Bob Iaccino of Path Trading Partners joined “First Mover” to discuss what’s next. To discuss the future of crypto regulation, Acting Chief of the Office of the Comptroller of the Currency (OCC) Michael Hsu and former SEC Branch Manager Valerie Dahiya of Perkins Coie LLP joined First Mover.
Headings
Ether turns deflationary for first time since Coinbase merger: The number of tokens fell by 4,000 over the past week as more ether was burned to confirm transactions than was created, the report said.
Stablecoin issuer Tether cuts certificate holdings to zero: The company has gradually replaced its certificate holdings with US Treasury bills.
Police complaints in this Indian district go on Polygon Blockchain: “This is very close to my heart,” Polygon co-founder Sandeep Nailwal tweeted, referring to corruption in local police departments that can lead to manipulation of public complaints.
Bitcoin Drops After US CPI Report Shows Inflation Hotter Than Expected: The “core” consumer price index, seen as a more stable indicator of inflation, rose 6.6% from a year earlier – a four-decade high.
China’s CBDC transactions reach $14 billion as uptake slows, reports the South China Morning Post: Transaction volume in e-CNY has only increased by 14% in 2022 from the end of last year compared to the 154% growth recorded in the last six months of 2021.
