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Bitcoin Appears to Have Priced In Fed's Hawkish Shift

The latest moves in crypto markets, in context Edited by Omkar Godbole December 15, 2021 Sponsored by     Bitcoin (BTC) See the latest price here Ether (ETH)  See the latest price here If you were forwarded this newsletter and would like to receive it, sign up here.  Good morning, and welcome to First Mover. Here's what's happening this morning: Market Moves: Bitcoin May Have Priced In Fed's Hawkish Policy Shift   Technician's Take: Bitcoin's Bullish Inside Day   And 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.   – Omkar Market Moves by Omkar Godbole The crypto market showed signs of life in Asia and Europe, with scaling solution Polygon's MATIC token and meme cryptocurrency Dogecoin extending Tuesday's gain.    Bitcoin, ether and the S&P 500 futures lacked a clear directional bias, perhaps on caution ahead of the all-important Fed meeting.    What's expected?    The central bank is widely expected to announce a $30 billion reduction in asset purchases starting in January 2022, doubling the pace two months prior in a bid to phase out the $120 billion per month program by March. Further, it is likely to signal two rate hikes in 2022.   What's priced in?   Markets have priced in an end of the QE program by March, with the Fed fund futures pulling forward the timing of the first interest rate hike to May. Further, futures have baked in a total of three rate hikes for next year.  Bitcoin and dollar index (DXY) daily charts on Dec. 15 (TradingView) Risk assets, including bitcoin, have witnessed a significant amount of de-risking in recent weeks, perhaps in anticipation of the Fed turning hawkish in response to elevated price pressures in the economy. Bitcoin, for one, has declined over 30% since peaking near $69,000 on Nov. 10.    Potential bounce   So, the probability of a deeper sell-off on the Fed announcement is relatively low unless the central bank hints at more aggressive tightening than what's baked in.   "De-risking in anticipation has been extensive. Many already panic sold. Positioning is light. Therefore, if the Fed were to deliver accelerated taper, signal two hikes for 2022, and nothing else, I would expect a rally across asset classes," trader and analyst Alex Kruger tweeted.   Real rates to remain negative   There is consensus that the impending tightening hike cycle will see rates peak well below the high of 2.5% observed during the previous cycle dated December 2015 to December 2018.    According to Reuters, "markets are currently priced for a peak of just 1.5%-1.75%, a level that would likely not even top inflation." Further, bond traders see rates averaging just 1.8% for the next three decades.   So, real or inflation-adjusted returns in the fixed income world are likely to remain negative for a prolonged time, perhaps driving yield-hungry investors to crypto.    Bitcoin and other asset prices may face selling pressure if the Fed signals a higher-than-expected peak. Also read: Bitcoin, Cardano, Ether and Everything Else Is Still Down 99% on CoinMarketCap A Message from Bybit In case you missed it, Bybit is giving away up to $3,000 in bonuses to each new Bybit user! All you have to do is join the community and make a first ever deposit. The more you deposit, the higher your rewards. Plus, stand a chance to win 0.1 BTC or 1 ETH when you trade at least $100,000 in Spot and Derivatives combined. T&Cs apply. Event ends Jan. 3, 2022, 10AM UTC. *Terms and conditions apply. Biggest Movers These are the biggest movers in the CoinDesk 20 over the past 24 hours:   Top Gainers: Polygon (MATIC): +9.5%, Sector: Smart Contract Platform Solana (SOL): +6.7%, Sector: Smart Contract Platform Bitcoin (EOS): +2%, Sector: Currency Top Losers:  Dogecoin (DOGE): -10%, Sector: Currency Bitcoin cash (BCH): -1%, Sector: Currency Polkadot (DOT): -0.5%, Sector: Smart Contract Platform The CoinDesk 20 are 20 digital assets filtered from the larger universe of thousands of cryptocurrencies and constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges. Technician's Take by Omkar Godbole Bitcoin's Bullish Inside Day Bitcoin's daily chart (Source: TradingView) Tuesday's inside day candle representing a narrowing of price range over the day suggests scope for a corrective bounce. Inside day candles are more bullish if appearing after a notable downtrend, as with bitcoin. A Message from Amber Everyone wants to build wealth with simplicity and security. But how?   WhaleFin is a digital investing experience offering easy portfolio management tools, attractive investment yields, and access to the emerging digital lifestyle. With over $1T in volume traded, WhaleFin offers personalized, compliant, and secure service across dozens of digital assets in 150+ countries. And every investment on WhaleFin helps protect aquatic habitats and reduce atmospheric carbon by supporting WDC and Moss Earth.   Find out more ICYMI In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:   NYDIG Announces $1B Funding Round, Senate Committee on Banking, Housing and Urban Affairs Hosting a Hearing on Stablecoins   "First Mover" hosts speak to Dr. Ryan Clements, assistant professor at the University of Calgary Faculty of Law, for his insights into the Senate hearing on stablecoins. Titan Co-founder and co-CEO Clay Gardner provides markets analysis. Plus, Travala CEO Juan Otero shares details behind its exponential growth in November. Latest Headlines Bitcoin, Cardano, Ether, and Everything Else is Still Down 99% on CoinMarketCap A price glitch on the tracking site saw crypto market caps run into trillions of dollars. The glitch has since been fixed, but some of the turbulence remains. 55% of Aave's Community Votes for 'Business License' to Prevent Forks A popular governance proposal that gained traction among Aave holders has now ended, but some holders are expressing their concerns. Dogecoin Leads Gains as Crypto Market Shows Muted RecoveryCrypto markets saw muted gains after almost a week of declines. Binance, MDI-Led Consortium to Create Crypto Exchange in Indonesia The companies have set up a JV that will focus on blockchain development in the country. Bitcoin Miner CleanSpark 2021 Revenue Rises 400% The sustainable bitcoin mining company nearly reached its goal of generating $50 million in revenue for the fiscal year, but also recorded a net loss of $21.8 million. 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.  First Mover A newsletter from CoinDesk Were you forwarded this newsletter? Sign up here.  Copyright © 2021 CoinDesk, All rights reserved.  250 Park Avenue South New York, NY 10003, USA Manage your newsletter subscriptions  |  Unsubscribe from all CoinDesk email