Bitcoin Shrugs Off Russia's Anti-Crypto Talk, El Salvador's CDS Surges

Bitcoin's Monthly Chart Leans Bearish

The latest moves in crypto markets, in context January 20, 2022 Sponsored by     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's price appears unfazed by Russia's anti-crypto talk, while in traditional markets analysts are assessing bitcoin-buyer El Salvador's creditworthiness.  Technician's Take: Bitcoin's monthly chart leans bearish. 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. Today's show will feature guests: Dave Nadig, director of research, ETF Trends Esther Crawford, product lead for creators, Twitter Anna Baydakova, reporter, CoinDesk Today's newsletter was edited by Omkar Godbole.  Market Moves The crypto market looked poised for a recovery rally, with an uptick in U.S. stock futures early Thursday helping bitcoin stay mildly bid in the wake of Russia's central bank suggesting a blanket ban on all digital assets-related activities.    The tough talk comes as escalating geopolitical tensions between Russia and the West threaten to inject volatility into the rouble's exchange rate, which, in turn, may encourage Russians to take the crypto route.    Bitcoin's implied volatility tanks   The one-month implied volatility, which reflects investors' expectations for price turbulence over the next four weeks, has dropped to an annualized 58.9%, the lowest since November 2020, according to data provided by derivatives research firm Skew.    The metric has come off sharply from 85% since mid-December, at least in part due to the growing investor participation in the weekly tied to bitcoin, ether and altcoins "covered call/put" strategies offered by decentralized finance (DeFi) asset management platforms, including Ribbon Finance and StakeDAO.    "New DeFi innovations may contribute to lowering the implied volatility. Structural volatility sellers have emerged from DeFi Options Vaults. These vaults perpetually employ their allocated capital to sell covered calls and cash-secured put," Arcane Research's weekly note published Tuesday said.    In simple words, traders or market makers buying options from DeFi vaults have been hedging their exposure by selling options on centralized exchanges, in turn driving the implied volatility lower.    Implied volatility is influenced by demand for options (call and put).    Big move ahead?   Implied volatility typically mean-reverts – goes back toward its historical average. So with the one-month gauge currently hovering well below its lifetime average of 76%, some observers are calling a volatility explosion – a big move on either side.    Seasoned traders typically buy both calls and put options when expecting a surge in volatility. That said, periods of low volatility can last longer, yielding losses for option buyers.    El Salvador's CDS surges   When El Salvador adopted bitcoin as legal tender in September, the move received a rapturous reception from the crypto community, with many predicting a change in the debt-ridden nation's fortunes.   Five months later, the country's sovereign credit perception in global bond markets is four times worse than it was.   Salvador's five-year credit default swap (CDS) has more than quadrupled to $1,800 since early September, according to Bloomberg data shared with CoinDesk by Marc Ostwald, the chief economist and global strategist at ADM Investor Services International (ADMISI). Credit default swaps measure the cost of insuring against a country defaulting on borrowing repayments at any time in a specified period – so a rising CDS price implies that traders see a borrower's creditworthiness as deteriorating.      "Salvador's CDS is telling you a default is expected at some point," Charlie Morris, CIO at ByteTree Asset Management, said. As of Wednesday, the nation's CDS price was the second-highest in Latin America, behind Argentina. Chart showing a surge in Salvador's five-year credit default swap (Source: Bloomberg) While several traditional market observers were quick to call out El Salvador's supposedly utopian decision to adopt bitcoin as legal tender and invest in the top cryptocurrency as the reason for the spike in the country's CDS, the U.S. Federal Reserve's hawkish turn also appears to have played a role.   Read the full story here: The 3 Reasons Behind Bitcoin-Holder El Salvador's Deteriorating Creditworthiness   A Message from CME Step into Ether futures with a micro-sized contract Introducing Micro Ether futures (MET) – sized at 1/10 of one ether, the new contract provides an efficient, cost-effective way to manage your exposure to one of largest cryptocurrencies by market capitalization. Trade Ether futures in a smaller size Enjoy the same benefits as the larger Ether futures contract at a fraction (1/500) of the size and with lower margins, settled to the regulated CME CF Ether-Dollar Reference Rate. Precisely scale your ether exposure Add more control over the amount of ether exposure in your trading strategies. Enjoy price discovery and transparency Trade in a CFTC-regulated, transparent, and liquid marketplace, providing time-tested financial safeguards and price discovery.   Explore Micro Ether futures Crypto Prices Bitcoin (BTC) See the latest price here Ether (ETH)  See the latest price here The following are the biggest movers in the CoinDesk 20 digital assets over the past 24 hours: Biggest Gainers: Asset Ticker Returns Sector Cosmos ATOM +8.4% Smart Contract Platform Chainlink LINK +2.5% Computing Polkadot DOT +2.4% Smart Contract Platform Biggest Losers:  Asset Ticker Returns Sector Cardano ADA −2.7% Smart Contract Platform Internet Computer ICP −2.1% Computing Ethereum Classic ETC −1.1% Smart Contract Platform Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.  A Message from Brave Brave Wallet is the first secure crypto wallet built natively in a web3 browser. No extensions required.   Store, manage, and grow your portfolio, get NFT & multi-chain support. Even connect other wallets and DApps. All from the security of the best privacy browser on the market.    Whether you're new to crypto, or a seasoned pro, it's time to ditch those risky extensions. It's time to switch to Brave Wallet.  Download Brave today, and click the Wallet icon to get started. Latest Headlines Bank of Russia Calls for Full Ban on Crypto Crypto.com Says Hackers Stole Nearly $34M From Users Andreessen Horowitz Looks to Raise $4.5B for New Crypto Funds: Report Multichain Says One Hacker Returned Over $800K First Mover Asia: Bitcoin Slides Under $42K; Altcoins Fall New Year, New Money New Money, a new series by CoinDesk, explores what it means to be part of the new "creator economy." In the talk show hosted by Spencer Dinwiddie and Solo Ceesay, we hear from pro athletes, celebrities and social media influencers who are on the cutting edge of interacting directly with fans and developing new ways to generate revenue from their own celebrity. Learn more here. Technician's Take By Omkar Godbole Bitcoin's monthly chart leans bearish Bitcoin's monthly chart with MACD histogram (Source: TradingView)  Bitcoin's monthly chart moving average convergence divergence (MACD) histogram is about to cross below zero, confirming a bearish trend reversal.    The previous negative crossover confirmed in July 2018 was followed by a deeper price sell-off.  ICYMI In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:   Bitcoin Price Recovering From Slump, JPMorgan Report Suggests Ether Is Losing NFT Market Share to Solana   "First Mover" hosts are joined by Osprey Funds Founder and CEO Greg King and eToro U.S. Managing Director Guy Hirsch for a look at today's crypto markets and key trends to watch in 2022.     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