First Mover Asia: Crypto Slide in Weekend Trading; Did Ethereum pick the wrong time to merge? | Cryptocurrency

Ether drops to lowest level since July; bitcoin falls below $19.5,000.

Hello. Here is what happens:

Price: Ether Falls to Low Since July; bitcoin and major altcoins fall as investors await the latest interest rate decision from the US central bank.

Insights: The timing of the Ethereum merger may not have been ideal.

Prices

  • Bitcoin (BTC): $19,476 −2.6%
  • Ether (ETH): $1,346 −7.3%
  • CoinDesk Market Index (CMI): $951 −4.4%
  • S&P 500 daily close: 3,873.33 −0.7%
  • Gold: $1,686 per troy ounce + 0.9%
  • Daily close of the 10-year Treasury yield: 3.45% −0.01

Bitcoin, Ether, and Gold prices are taken at around 4 p.m. PT. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk indices is available at coindesk.com/indices.

Ether sinks towards $1.3,000

By James Rubin

Did someone say Fusion?

Investor euphoria over the technological transformation of the Ethereum blockchain last week seemed long gone as the price of ether tumbled to its lowest level since late July on Sunday.

The second-largest cryptocurrency by market capitalization was recently trading below $1,350, a drop of more than 7% in the past 24 hours that continued its post-merger decline of the previous three days. ETH started to comfortably change hands for over $1,700 last week amid high expectations for Ethereum’s move from a proof-of-work protocol to a more energy-efficient proof-of-stake protocol. The full impact of the merger may not be evident for some time.

For now, ether and other cryptos look likely to remain vulnerable to the same macro forces that have plagued stocks and other riskier assets for months.

Bitcoin was recently trading at around $19,450, down more than 2.5% from Saturday and near its 10-day low. At the start of the week, the largest crypto by market value began to slide from a perch above $22,000 after a disappointing consumer price index (CPI) indicated that the US central bank had there is still work ahead of it to bring inflation under control. Investors will closely watch the Federal Open Market Committee’s (FOMC) decision on another interest rate hike this week (UTC), although a minimum 75 basis point increase is widely expected – a continuation of the Fed’s monetary policy.

“We can see that BTC’s relief rally was indeed unsustainable, and it gave up much of its gains after CPI data came out higher than expected and the ETH meltdown turned out to be an information selling event,” Joe DiPasquale, CEO of crypto fund manager BitBull Capital, wrote in an email to CoinDesk. “However, the next FOMC will be a key point for the markets, as participants expect a 75 basis point rate hike while some expect even more hawkish action. »

Most other major cryptos turned dark red on Sunday with OP recently down 17% and RVN and YGG down around 15% each. KNC, the Kyber network token, was down about 25% in more than 8 hours after a Twitter discussion about an exploit.

The Fear & Greed crypto index remains firmly in fear territory.

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Stock markets ended a dismal week on a dismal note with the tech-focused Nasdaq, S&P 500 and Dow Jones Industrial Average (DJIA) all dropping a full percentage point as markets continued to absorb last week’s disappointing consumer and producer price indexes and a quick series of corporate blows. Those successes included FedEx’s announcement on Thursday that it would close offices due to worries about a recession, impending job cuts at Goldman Sachs and supply chain issues at General Electric. Fedex activity is often seen as a measure of broader business and consumer activity. For the week, the Nasdaq plunged more than 5%, while the S&P and DJIA each fell more than 4%.

On Thursday, the World Bank also noted that central bank interest rate hikes could push the global economy into recession in 2023.

Besides the FOMC meeting, investors will be watching housing starts and existing home sales in August for the latest signs of a now hard-hit housing market. Last week, the mortgage rate for a 30-year loan hit 6% for the first time since 2022 and housing and construction data over the past few months has sagged.

Crypto News

Meanwhile, the latest reports from the US Treasury Department on Friday did little to clarify what the Biden administration and regulators will do about digital assets. As CoinDesk reported, the federal government remains concerned about potential crypto risks, and regulatory agencies see increased enforcement action as an important step. “It’s been six months since President Biden’s executive on cryptocurrencies, but this framework hardly sets anything major in motion,” wrote Edward Moya, senior market analyst at Oanda.

In stark contrast to the near-flawless execution of the Ethereum Merge, technical snafus and defections marred the new blockchain ‘fork’ by crypto miners aiming to preserve the old proof-of-work network . Chandler Guo, one of the fork’s most vocal advocates, told CoinDesk TV’s First Mover program on Friday that only 10% of miners using PoW to mine ETHPOW (the Ethereum Merge fork token) or ETC (Ethereum’s token Classic) will eventually survive. ETC recently lost more than 13%.

BitBull’s DiPasquale optimistically noted that “any sign of moderation in the [FOMC] The meeting will most likely give the market a strong push, and we could see a short-term bottom forming if the price falls further due to a 75 basis point rise. »

He added, “BTC remains attractive below $20,000 and we will continue to accumulate up to $17,000 and $15,000, if seen. At the top, if BTC makes a major breakout, we can see $24,000 as the first major resistance, followed by $27,000. »

The biggest winners

There are no winners in CoinDesk 20 today.

The biggest losers

Asset Teleprinter Return DACS sector
Gala GALA −11.8% Entertainment
shiba inus SHIB −8.8% Currency
avalanche AVAX −8.0% Smart contract platform

Knowledge

Was the Ethereum merger timing off?

By Sam Reynolds

In the moments after the merger, it seemed like all was well. Technically, the process was seamless and Ether traded flat within hours.

But the newly dubbed proof-of-stake ether tumbled the next day, dropping 9% as its losses accelerated beyond bitcoin. Ether was most recently down XX%.

The digital asset industry faces a high interest rate environment, with quantitative crunch at levels not seen in decades ⁠ – vastly higher than the world Ethereum “grew up” in.

According to Bloomberg data from traders, interest rates are expected to peak at 4.42% in March 2023 and remain above 4% for the rest of the year. As a result, the dollar is expected to hit all-time highs, which is a bearish case for “ultrasound money.”

The next big interest rate hike will come after the next meeting of the Federal Open Market Committee (FOMC), scheduled for Wednesday and Thursday, where the odds of a 100 basis point hike have increased.

Analysts are predicting strong headwinds for the cryptocurrency market.

another hurdle

There is another headwind for Ethereum, and it is not based on macroeconomic policy.

The Securities and Exchange Commission (SEC) pays particular attention to proof-of-stake tokens. Chairman Gary Gensler was quoted as saying – though not specifically about Ethereum – that the nature of PoS could make it an investment contract that subjects them to securities regulation.

But there is one factor that could work in favor of Ethereum: exchange flows.

Data released Friday by Glassnode shows strong pre-merger inflows are beginning to reverse. Although there are still inflows, the $1.2 billion deposited by traders has now disappeared and a net $395 million has left the exchanges.

Generally, this is considered a bullish sign. Let’s see if it stays that way as interest rates rise.

Important events

Foreign Direct Investment (YTD) (August/YOY)

10:00 p.m. HKT/SGT (2:00 p.m. UTC): US NAHB Housing Market Index (Sep)

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First Mover Asia: Crypto Slide in Weekend Trading; Did Ethereum pick the wrong time to merge? | Cryptocurrency


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