First Mover Americas: Biden Issues Crypto Order; Inflation Expectations Hit Record High

The latest moves in crypto markets in context for March 9, 2022.

AccessTimeIconMar 9, 2022 at 1:56 p.m. UTC
Updated May 11, 2023 at 5:55 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Good morning, and welcome to First Mover, our daily newsletter putting the latest moves in crypto markets in context. Sign up here to get it in your inbox each weekday morning.

Here’s what’s happening this morning:

  • Market Moves: Bitcoin keeps early gains. Biden's crypto order didn't announce new regulations for the industry. Privacy coins rally.
  • Featured stories: U.S. 10-year breakeven inflation rate hits record high, offering positive cues to bitcoin's price. Whales liquidate their holdings.

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:

  • Kristin Smith, executive director, Blockchain Association
  • Damanick Dantes, markets reporter, CoinDesk
  • John Sarson, CEO and founder, Sarson Funds

Market Moves

By Omkar Godbole

Bitcoin (BTC) consolidated on overnight gains after U.S. President Joe Biden signed a crypto order early Wednesday directing federal agencies to coordinate their efforts to draft cryptocurrency regulations.

The executive order did not lay out specific positions the administration wants agencies to adopt or announce new regulations for the industry, CoinDesk's managing editor for global policy and regulation, Nikhilesh De, reported.

A senior administration official did a balancing act while talking to reporters, acknowledging potential opportunities for American innovation and competitiveness that digital assets could provide along with risks associated with the growth of the crypto sector.

Some analysts were worried the long-awaited crypto order would announce stricter regulations, given the recent speculation that wealthy Russians are using digital assets to circumvent sanctions imposed by the West.

However, those fears were put to rest late Tuesday after an unintentional release of U.S. Treasury Secretary Janet Yellen's remarks on Biden's then-impending crypto order said the administration would support "reasonable innovation." Bitcoin picked up a bid after CoinDesk reported Yellen's comments, rising more than 7% to $42,000.

While most cryptocurrencies followed suit, privacy coins like monero (XMR) and zcash (ZEC) backed off from Tuesday's high. Both coins surged over 25% on Tuesday, perhaps due to traders anticipating increased demand for privacy on fears of increased regulation.

"My best guess of what's going on: With stronger oversight confirmed, segments of the market that value privacy (for ideological or illicit reasons) will rotate away from trackable crypto assets like BTC and [ether] ETH. Or at least this is what traders are speculating on," Ilan Solot, a partner at the TagusCapital Multi-Strategy Fund, said in an email.

"Traders are thinking that other traders are thinking that oligarchs would buy privacy coins, so they buy privacy coins. But really, no one believes that oligarchs are buying," Solot added.

Latest Headlines

US Inflation Expectations Hit Record High

By Omkar Godbole

The market-based measures of long-term inflation expectations in the U.S. continue to rise, offering positive cues to bitcoin.

The 10-year breakeven rate, derived from the spread between conventional and inflation-adjusted Treasury yields, rose to a new record high of 2.785% on Tuesday, surpassing the previous peak reached in 2005, according to the Federal Reserve Bank of St. Louis.

Bitcoin and U.S. 10-year breakeven rate (Source: Federal Reserve Bank of St. Louis)
Bitcoin and U.S. 10-year breakeven rate (Source: Federal Reserve Bank of St. Louis)

The above chart shows bitcoin has often moved in lockstep with the 10-year breakeven rate since the March 2020 crash.

"Bitcoin’s 90-day correlation with the United Sates’ 10-year breakeven inflation rate, which reflects inflation expectations, moved higher from the second quarter [of 2021] onward," Babel Finance said in a 2021 crypto market review shared with CoinDesk early this week.

"As an asset with the same durability, exchangeability and scarcity as gold, bitcoin began to partially replace gold as a trading instrument to hedge against inflation in the middle of the year," Babel Finance added.

Whale selling

Data tweeted by Blockware Solutions' William Clemente shows whales, or large investors, have been offloading coins over the past two weeks and the number of coins held by these wealthy investors has dropped to the lowest since September 2021.

A continued whale selling would be a cause for concern for the bulls.

Chart showing a renewed drop in the number of coins held by whales. (Glassnode)
Chart showing a renewed drop in the number of coins held by whales. (Glassnode)


Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.

Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.

Parikshit Mishra

Parikshit Mishra is CoinDesk's Deputy Managing Editor responsible for breaking news coverage. He does not have any crypto holdings.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.