The latest moves in crypto markets, in context Was this newsletter forwarded to you? Sign up here. |
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Good morning, and welcome to First Mover – featuring a new look. Here's what's happening this morning: - Market Moves: Bitcoin eyes weekly loss, next week's U.S. inflation data could bring more selling pressure to the market.
- Featured Story: A censorship-resistant inflation index is being built on Chainlink.
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. - Aleksander Larsen, co-founder and COO, Sky Mavis
- Don Kaufman, co-founder, TheoTrade
- Chen Arad, chief operating officer, Solidus Labs
Today's newsletter was edited by Omkar Godbole and produced by Bradley Keoun. Let us know what you think by replying to this email. |
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Macroeconomic fears resurfaced this week, putting pressure on risk assets, including bitcoin. The top cryptocurrency traded at $43,300 at press time, representing a 6% drop for the week. The minutes of the Federal Reserve's (Fed) March meeting released Wednesday revealed that policymakers plan to trim the almost $9 trillion portfolio by up to $95 billion each month. At that pace, the Fed would need four years to shrink the balance sheet to the pre-pandemic level. Many Fed officials said they were prepared to raise interest rates in half-percentage-point increments in upcoming meetings to control inflation – a far-steeper pace of monetary tightening than the usual quarter-point hikes. That puts the focus squarely on the U.S. consumer price index (CPI) for March, due for release on Tuesday. The data is expected to show the cost of living in the world's largest economy rose to an annualized 8.3% in March versus 7.9% in February, according to Dailyfx. One narrative is that an extra hawkish campaign by the Fed is already priced in and that a high CPI figure could be a non-event. (Whether the Fed will be able to walk the talk is a topic of discussion for another day). The Fed minutes are backward-looking, meaning they tell us what policymakers were thinking in mid-March, before the impending CPI release. Therefore, an above-8% CPI print, the first since 1982, could see investors reassess the pace of the Fed's tightening, injecting volatility into bonds and risk assets. |
A big miss on CPI could temporarily restore the risk-on sentiment. However, a massive scaling back of rate hike bets would require consecutive weak inflation prints. But, that's unlikely, as per some experts. "Higher inflation has become increasingly broad-based. Since the start of 2021, the share of items in the consumption basket that have seen very large price rises has increased steadily," the Bank for International Settlements said in a note published on April 5. "In particular, growth in services has accelerated. Because growth in service prices tends to be more persistent than that in goods, inflation may be becoming more entrenched." Lastly, bitcoin's rising correlation with equities means it could underperform traditional store of value assets like gold in the coming months. The yellow metal and oil outperformed S&P 500, Wall Street's benchmark index, by significant margins during previous periods of stagflation. History could repeat itself, drawing investors away from equities, especially tech stocks and toward energy. Analysts at JPMorgan foresee a 40% rally in commodities in the coming months. "In the current juncture, where the need for inflation hedges is more elevated, it is conceivable to see longer-term commodity allocations eventually rising above 1% of total financial assets globally, surpassing the previous highs," the JPMorgan strategists wrote in an April 6 note. All else being equal, that "would imply another 30% to 40% upside for commodities from here," they said, according to Bloomberg. |
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Investors, you deserve a Spot Bitcoin ETF Since its inception in 2013, Grayscale has never stopped working towards converting Grayscale Bitcoin Trust (symbol: GBTC) to a Bitcoin ETF. If you support the conversion, write to the SEC by clicking here. Your submission matters because: We can level the playing field. To date, the SEC has only permitted Bitcoin Futures ETFs, while rejecting "physically-backed" or Spot Bitcoin ETFs. The choice should be yours. If you've been waiting for the familiarity and protections of a Bitcoin ETF, we believe you should not be forced into a Futures-based product simply because it's the only one that exists. You can help take GBTC to the next level, conversion to an ETF. It's already the world's largest Bitcoin fund and regularly reports to the SEC on a voluntary basis as an SEC-reporting company. Learn more here. This information should not be relied upon as investment advice or a recommendation regarding any security. Visit here for important disclosures. |
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The following are the biggest movers in the CoinDesk 20 digital assets over the past 24 hours: |
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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. |
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A Censorship-Resistant Inflation Index Is Being Built on Chainlink By Helene Braun |
Decentralized finance (DeFi) firm Truflation is building a new gauge to track inflation independent from the government and in real-time. Think of it as a competitor to the Consumer Price Index (CPI), and one where officials can't move the goalposts. "The framework that [the government] is using is a hundred years old … and they have continuously tried to evolve that versus taking a fresh approach in an age where we've got everything computerized," Truflation founder Stefan Rust told CoinDesk in an interview. The team started building Truflation after former Coinbase CTO Balaji Srinivasan challenged Web 3 developers to build a censorship-resistant inflation feed, claiming that "the centralized state isn't going to provide reliable inflation stats," and promising an investment of $100,000. Read The Full Story Here: A Censorship-Resistant Inflation Index Is Being Built on Chainlink |
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Consensus 2022, the must-attend crypto and blockchain experience of the year, is heading to Austin, Texas, from June 9-12. This is the only festival showcasing and celebrating all sides of the blockchain and crypto ecosystems and their wide-reaching effect on commerce, culture and communities. Register now for the lowest price. |
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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. |
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