First Mover: Bitcoin Retreats Before U.S. Election After Dominating Crypto in October

ALSO: Crypto miners paying 40% to borrow Filecoin's FIL tokens

November 2, 2020 Sponsored By: By the CoinDesk Markets Team Edited by Bradley Keoun If you were forwarded this newsletter and would like to receive it, sign up here.  Bitcoin (BTC) -3.3% $13,220 Ether (ETH)  -3.9% $381 (Price data as of Nov. 2 @12:59 UTC) TODAY: Price Point: Bitcoin retreats after notching new 2020 high around $14,100.  Market Moves: Bitcoin had an unusually bullish October, with a 29% gain that led the monthly performance ranking of digital assets in the CoinDesk 20.   Bitcoin Watch: Failure to hold above 2019 high of $13,880 signals "healthy" correction ahead, with $12.5K seen as strong support level, CoinDesk's Omkar Godbole writes.  What's Hot: Crypto miners paying 40% to borrow Filecoin's FIL tokens, proposal for another Uniswap airdrop fails to garner quorum, China completes almost $300M worth of digital yuan transactions, Bitcoin's mining difficulty set for big drop.  Price Point Bitcoin was lower around $13,200, retreating after reaching a fresh 2020 high near $14,100 on Oct. 31.    Tuesday's presidential election in the U.S. "is going to be the driving force for global markets," Matt Blom, head of sales and trading for the cryptocurrency-exchange owner Diginex, told clients in a note.   Analysts have warned that markets could see extreme volatility if the election results are murky, and the Federal Reserve has a regularly scheduled meeting just days afterward.    "It seems we will have to wait until after tomorrow when the U.S. goes to the polls before we see any further clarity," Simon Peters, an analyst for the trading platform eToro, wrote Monday in an email.     In traditional markets, Asian and European indexes rose and U.S. equity futures pointed toward a higher open after last week's steep drop. Oil prices fell to a five-month low, while gold strengthened 0.5% to $1,888 an ounce.   Market Moves If it seemed like an unusually bullish month for bitcoin (BTC), the markets agreed.   The oldest and largest cryptocurrency surged 29% in October, the most among the CoinDesk 20 list of top digital assets.   Litecoin (LTC) was the second-best performer in the group, with a 22% return, followed by bitcoin cash (BCH) at 16%.   CoinDesk reported around the start of the month (here and here) that digital-asset analysts were turning more bullish on bitcoin. Some traders had started rotating funds into the cryptocurrency from smaller tokens like Compound's COMP and Yearn.Finance's YFI that surged in price earlier this year amid an explosion in popularity of "decentralized finance," or DeFi.     "We are seeing a return to bitcoin dominance," said Andrew Ballinger, an analyst at Wave Financial, a digital-asset-focused investment manager based in Los Angeles and London.     The renewed interest in bitcoin, now with a market capitalization of about $250 billion, coincided with new signs of growing interest in the cryptocurrency from institutional investors as well as big companies like PayPal and Square. A resurgence of the coronavirus along with a deteriorating U.S. economic outlook kindled speculation that authorities would push to provide more fiscal and monetary stimulus; that might push up bitcoin's price, seen by many investors as a hedge against inflation.     Bitcoin's performance also stood out versus traditional assets. The Standard & Poor's 500 Index of large U.S. stocks slid 2.8% in October, and gold slipped 0.1%.    The question going forward is whether bitcoin reverts to the mean or if it gets carried up on a groundswell of investors piling into the only big trade that really seems to be working in 2020. Bitcoin is up 92% year to date, versus a 1.2% gain for the S&P 500.    The biggest losers in the CoinDesk 20 in October were Orchid (OXT), with a price decline of 25%, and 0x (ZRX), down 21%.  SPONSORED BY ALPHA5 Alpha5 is the first cryptocurrency exchange to unleash the full power of futures trading. Unlock opportunities hidden in plain sight and take on a new type of risk management.   Experience: •  Basis Trading: Earn yield as the difference between futures turns into interest rates •  Rolling: Move an exposure in any future to another, with a single click •  Hedging: Have a lot of exposure in various maturities? Dynamically calibrate it   All of this is powered by implied orderbooks, a true "liquidity mining" mechanism, only otherwise available on the most advanced onshore exchanges, and now on Alpha5.   Learn More Bitcoin Watch Bitcoin daily chart showing resistance at $14,000, and weekly price chart showing the June 2019 high. (TradingView) Bitcoin is feeling the pull of gravity at press time, having failed to keep gains above a key hurdle over the weekend.    The top cryptocurrency is currently trading near $13,450, representing a 2.3% decline on the day. Prices reached a 33-month high of $14,093 on Saturday, shrugging off the recent coronavirus-led stock market instability.    However, the move above the June 2019 high of $13,880 was short-lived. The cryptocurrency's inability to secure a foothold in the wake of overbought readings on technical indicators seems to have disappointed chart traders and could be fueling the price pullback.    According to some analysts, the failed breakout, coupled with continued instability in traditional markets, could lead to a bigger bitcoin price drop in the short-term.    "If we consider overbought daily technicals plus failure to beat the 2019 high resistance and a risk-off backdrop, it is perfectly reasonable to anticipate the possibility for a healthy decline ahead," Joel Kruger, a currency strategist at LMAX Digital, told CoinDesk.   Besides, many fear that the results of the election will not be immediately clear, resulting in a period of uncertainty for the markets.   All these factors considered, the possibility of bitcoin revisiting the former hurdle-turned-support of $12,500 cannot be ruled out.   That said, a price crash looks unlikely, as the cryptocurrency currently has a strong bid from institutions, trader and analyst Nick Cote told CoinDesk last week. Token Watch Filecoin (FIL): Crypto miners paying interest up to 40% to borrow decentralized data storage provider's FIL tokens, to meet required proof-of-stake threshold.    Uniswap (UNI): Quorum not achieved on governance proposal to airdrop $40M of UNI tokens to users who interacted with DeFi market maker through third-party apps, despite apparently overwhelming support.    Horizen (ZEN): Crypto lender Celsius works with Horizen, developer of privacy token ZEN, to run experiments for decentralized way of proving reserves (CoinDesk)   What's Hot Chinese central-bank governor more than 4M transactions totaling about 2B yuan ($299M) have been conducted using digital yuan. (CoinDesk)    Bitcoin mining difficulty set to drop by an estimated 15%, as blockchain network automatically rebalances from decrease in hashpower due to end of China's rainy season (HASHR8)    ECB's Lagarde seeks public comments on digital euro, implying broad retail offering is now on table (CoinDesk)    Australian central bank partnering with multiple prominent domestic banks to explore possible use of digital currency (CoinDesk)   Analogs Bank of England expected this week to increase size of asset-purchasing program by 100B pounds to £845T ($1.1T) (Reuters)    Activity in China's factory sector accelerates at fastest pace in decade as domestic demand surges (Reuters)    Former U.S. Food and Drug Administration chief warns that U.S. is at "beginning of the steep part of the epidemic" (CNBC)    Rich buyers fleeing cities and coronavirus fuel housing boom in Montana, as remote-working shift untethers high-paying jobs from offices (Bloomberg)    Chinese President Xi calls for independent and controllable supply chains to ensure industrial and national security, as U.S. moves to cut country off from key exports (Bloomberg)     U.S. billionaires, numbering roughly 200 people, got $1T richer during Trump's term (Bloomberg)    Tweet of the Day With the U.S. Election Day next week, much is at stake - including crypto policy over the next four years.   Like it or not, this election will matter for the crypto industry. Our latest limited-run newsletter, The State of Crypto: Election 2020 by regulatory reporter Nikhilesh De, aims to walk you through why.   At stake: Will new crypto products be approved or allowed to operate in the U.S.? Will regulators target more overseas exchanges and platforms like BitMEX? Will the U.S. launch a "digital dollar" or some other form of central bank digital currency?   These questions will come down to who takes the reins at the various financial regulators and government departments. Over the next several days, we map out the possible outcomes and introduce analysis of the candidates.   Our limited-run newsletter runs Mondays, Wednesdays and Fridays at least until Election Day. Subscribe to The State of Crypto: Election 2020. On Purpose podcast host and Onramp Invest CEO Tyrone Ross invites the public to CoinDesk's first podcast live taping party on Wednesday, Nov. 3.    Attendees will be part of the experience and get to ask frank questions to Ross and his guests Adam Pokornicky, COO of Digital Asset Investment Management; Andy Edstrom, financial adviser and investor at WESCAP Group; and Sunayna Tuteja, head of digital assets at TD Ameritrade; as they raise the big questions for financial advisors in a jargon-free, transparent discussion. Pokornicky, Edstrom and Tuteja, who are also speaking at CoinDesk's Bitcoin For Advisors event for registered investment advisers Nov. 9-10, are experts in the digital asset class in the context of how it fits in the realm of portfolio management, including understanding bitcoin's macro implications, preparing against bitcoin's volatility and how to fold it into retirement accounts. CoinDesk's upcoming virtual event Bitcoin for Advisors, on two half days Nov. 9-10, aims to equip investment advisors with tools to better understand bitcoin, talk to their clients about it and work it into their business.   In close cooperation with professional advisors, CoinDesk is showcasing a program tailored to the financial advisor community. Through a series of keynotes, panels and interactive roundtable sessions, we will discuss investment theses for bitcoin, why younger demographics are turning to this asset and how it fits into the current global macroeconomic picture.   We will also walk through the practicalities: how to answer client questions about bitcoin, how to talk to your compliance department about bitcoin, how can bitcoin can help grow your book. Apply for Bitcoin for Advisors, Nov. 9-10. Webinar: How to Value Ethereum   In this 30-minute webinar, the first of the four-part series How to Value Ethereum, CoinDesk Research looks at accounts - a concept that sounds familiar to blockchain addresses, but involves novelties and complexities that are critical to understanding how Ethereum works.   Register to join How to Value Ethereum on Nov. 11. 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. ATTENTION: Scammers have been sending fraudulent emails with links to sites disguised to look like coindesk.com. If you are in doubt about a link, type https://www.coindesk.com directly into your browser; do not copy and paste. Remember, if something seems too good to be true, it probably is. First Mover   A newsletter from CoinDesk   See Previous Editions Copyright © 2020 CoinDesk, All rights reserved.    250 Park Avenue South New York, NY 10003, USA You can manage your preferences here or unsubscribe from all CoinDesk email.