Will bitcoin continue to outperform stocks for the rest of the year?
Hello, welcome back to Distributed Ledger, our weekly crypto newsletter that hits your inbox every Thursday. I’m Frances Yue, crypto reporter at MarketWatch. I’ll be walking you through the latest and greatest in the digital resource world this week.
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Crypto in a flash
Bitcoin BTCUSD,
fell about 7.2% over the past seven days, trading at about $19,158 on Thursday, according to CoinDesk data. Ether ETHUSD,
lost 8.5% over the seven-day stretch to around $1,275. Meme token Dogecoin DOGEUSD,
traded 11.4% lower while another dog-themed token, Shiba Inu SHIBUSD,
was down 13.7% from seven days ago.
Cryptometrics
| Biggest winners | Price | %7-day return |
|
Huobi |
$7.18 |
74% |
|
TerraClassicUSD |
$0.05 |
66% |
|
Quant |
$158.57 |
14.7% |
|
Maker |
$943.57 |
12.3% |
|
Tokenize Xchange |
$11.64 |
10.6% |
|
Source: CoinGecko as of October 13 |
| Biggest losers | Price | %7-day return |
|
Celsius network |
$1.02 |
-24.8% |
|
EthereumPoW |
$7.32 |
-20.4% |
|
Klaytn |
$0.15 |
-19.8% |
|
Helium |
$4.58 |
-19.6% |
|
Lido DAO |
$1.23 |
-19.5% |
|
Source: CoinGecko as of October 13 |
Persistent inflation
The US consumer price index rose 0.4 percent in September. Economists polled by The Wall Street Journal predicted an increase of 0.3 percent. The annual inflation rate fell to 8.2% from 8.3%.
The warmer than expected CPI data reinforced the view that the Federal Reserve will continue to raise interest rates aggressively to curb inflation. After the data was released Thursday morning, traders priced in a 97.8% probability that the Federal Reserve will raise interest rates by 75 basis points to a range of 3.75% to 4% at its early November meeting, according to the CME FedWatch tool. The probability was up from 84.5% on Wednesday.
Bitcoin initially fell 3% to around $18,198 after the CPI data, before later retreating to around $19,158.
Bitcoins outperform stocks
Mark Connors, head of research at 3iQ Digital Asset Management, said he expects share prices to fall sharply and the bitcoin price to “stay much closer to current levels” in the coming months.
Connors expects stocks to slide further, with the stock market lagging behind the bond market. Earlier on Thursday, the 10-year government yield topped 4%. the highest level since 2010.
Read: Stocks won’t bottom out until Fed nears end of rate-hike cycle, says volatility maven
On the other hand, with increasing institutional adoption and after the June low washed out “weaker hands,” bitcoin may be in a better position, according to Connors.
Over 69% of bitcoin has been held for more than a year, Connors noted. “That means it’s mostly strong hands, all the tourists are gone,” Connors said.
In the third quarter, bitcoin outperformed the major US stock indexes, although the correlation between the two assets remained high. The 63-day correlation between bitcoin and the Nasdaq is recently near its peak of 67%, Connors noted. A correlation of 1.0 means that an asset pair moves in perfect lockstep, while a correlation of zero means that there is no correlation between price movements.
Still, bitcoin rose 4% from July to September, according to CoinDesk data. In contrast, the Dow Jones Industrial Average fell 7% in the same period, according to Dow Jones market data. The S&P 500 lost 5% in the third quarter and the Nasdaq Composite fell 4%.
“You had a correlation that didn’t speak to returns,” Connors noted. That may be due in part to bitcoin’s positively skewed return distribution, where investors can face frequent small losses and a few large gains. The correlation’s linear calculation may have failed to capture such a return character, according to Connors.
BNY Mellon Launches Crypto Custody Service
Bank of New York Mellon, the world’s largest custodian bank, said it would begin storing clients’ crypto assets from Tuesday, despite the price chaos of digital assets.
The service allows certain customers to hold and transfer bitcoin and ether through BNY Mellon, the lender said in a statement on Tuesday. The addition makes BNY Mellon the largest US bank offering custody of both crypto and traditional assets.
Although bitcoin has lost nearly 60% of its value so far this year, “we continue to see significant demand from institutional investors and are excited about future opportunities from blockchain and tokenization technology for assets and cash,” said Caroline Butler, CEO of Custody. services at BNY Mellon, wrote to MarketWatch in an email.
The move could boost institutional adoption for digital assets, as BNY Mellon, with $43 trillion in assets under custody as of June, has existing relationships with many financial heavyweights. I have written more about it here.
Google partners with Coinbase
Google said Tuesday it has partnered with Coinbase to begin allowing some users to pay for its cloud services using certain cryptocurrencies, according to a statement. The service will be rolled out in early 2023, CNBC reported.
Meanwhile, Coinbase will build its global data platform on Google Cloud and use the latter’s data platform to process blockchain data at scale, according to the statement.
SEC investigates NFT creator
The US Securities and Exchange Commission is investigating Yuga Labs Inc., the creator of Bored Ape Yacht Club non-fungible tokens, or NFTs, over whether its sale of digital assets violated securities laws, Bloomberg reported Tuesday.
The regulator is investigating whether certain NFTs Yuga Labs issued are securities and should follow the corresponding disclosure rules, according to the Bloomberg article citing a person familiar with the matter. Read more here.
Crypto companies, funds
Shares of Coinbase Global Inc. COIN,
fell 1% to $69.24 on Thursday, and was down 5.9% over the last five trading sessions. Michael Saylor’s Micro strategy Inc.
MSTR,
shares rose 1.9% on Thursday to $222.46, while they are down 8% over the past five days.
Mining company Riot Blockchain Inc. RIOT,
shares rose 4.2% to $6.40 on Thursday and were down 10.7% in the past five days. Shares of Marathon Digital Holdings Inc.
MARA,
advanced 6.9% to $11.14, while down 18% in the past five days. Another miner, Ebang International Holdings Inc. EBONY,
slid 1.8% to $0.37 on Thursday, while it is down 6.7% in the past five days.
Overstock.com Inc.
OSTK,
the stock rose 0.6% to $26.53. Shares traded 0.6% higher over the five-day period.
Shares of Block Inc.
SQ,
formerly known as Square, added 0.4% to $56.37 and was up 9% for the week. Tesla Inc. TSLA,
shares rose 1.9% to 221.37, down 7.2% in the past five days.
PayPal Holdings Inc.
PYPL,
rose 0.7% to $84.37, with a loss of 10.7% over five sessions. Nvidia Corp.
NVDA,
shares rose 4% to $119.60, looking at a loss of 8.6% in the past week.
Advanced Micro Devices Inc.
AMD,
shares rose 2.4% to $59.26 on Thursday, down 12.7% from five trading days ago.
Among crypto funds, ProShares Bitcoin Strategy ETF
BITO,
was up 1.6% to $11.96 on Thursday, while its Short Bitcoin Strategy ETF
BITI,
fell 1.6% to $38.23. Valkyrie Bitcoin Strategy ETF
BTF,
climbed 1.7 to $7.49, while VanEck Bitcoin Strategy ETF
xbtf,
rose 1.4% to $18.95.
Grayscale Bitcoin Trust
GBTC,
rose 1.5% to $11.38.
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