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 drops as bond yields continue to rise. Technical charts signal more losses ahead. Luna Foundation Guard returned to the bitcoin market with a bang.
- Featured Story: Metaverse platforms struggle as user base falls short of market expectations.
- Damanick Dantes, markets reporter, CoinDesk
- Scott Freeman, partner and co-founder, JST Capital
- James Czerniawski, senior tech and innovation policy analyst, Americans for Prosperity
- Bilal Hafeez, founder and CEO, Macro Hive
By Omkar Godbole
It's dip buyers versus an adverse macroeconomic situation in the crypto market today.
The foundation snapped up more than 5,000 BTC worth $230 million early Wednesday. That's more than software company MicroStrategy's purchases of 4,167 BTC between Feb. 15 and April 4.
Still, bitcoin traded weak as the uptick in the U.S. government bond yields triggered a renewed aversion to risky assets. MicroStrategy bought bitcoin on price dips in the final quarter of 2021, but that didn't stop or slow down cryptocurrency's bearish trend at the time as it nosedived from $68,000 to $32,000 in three months to late February, predominantly on fears of a more hawkish Federal Reserve.
Crypto Twitter is optimistic that LFG's continued purchases to build a $10 billion bitcoin reserve eventually will help the cryptocurrency decouple from traditional markets this time around. That belief perhaps stems from LFG buying bitcoin in large quantities compared with MicroStrategy's purchases. Only time will tell if LFG saves bitcoin from the macro conditions.
According to some observers, bitcoin's next leg higher would resume once the real or inflation-adjusted yields stop rising. The U.S. 10-year real yield has risen by more than 60 basis points in four weeks to hit a two-year high.
The Fed is scheduled to release the minutes of its March policy meeting on Wednesday. The CME Group's FedWatch Tool points to a greater than 70% probability of a 50 basis points rate hike in May. The central bank raised rates by a quarter percentage point last month.
"Now risk aversion is gradually rising, and the dollar index has reached its year-to-date highest level," Griffin Ardern, a volatility trader from crypto-asset management company Blofin, said. "The liquidity contraction may be accelerating. At 2 p.m. ET, details of the March FOMC (Federal Open Market Committee) meeting will be announced."
FXStreet editor and analyst Eren Sengezer noted that "in case the minutes show that policymakers considered a bigger rate increase but ended up voting for a 25 bps one to avoid a big market reaction, U.S. Treasury bond yields could continue to rise and provide a boost to the dollar. Market participants will also pay close attention to details surrounding the Fed’s plan to shrink the balance sheet."
The hourly chart (above left) shows that bitcoin has dived out of a narrowing price range.
The daily chart's relative strength index has breached the ascending trendline and the MACD (moving average divergence convergence) histogram has crossed into bearish territory under zero. As a result, support at $41,780 identified by the 50-day average stands exposed. On the higher side, the 200-day average at $48,266 is the level to beat for the bulls.
Metaverse Majors Struggle
By Sam Reynolds
The metaverse, despite all the interest from venture capital and the world’s major brands, is struggling to attract users, and token prices have begun to reflect that. Tokens for the three major metaverse protocols – Decentraland, Axie Infinity and The Sandbox – are all down year-to-date and underperforming bitcoin by a big margin.
“There is currently no organic engagement that retains players in the game – unlike traditional games like Fortnite, GTA, Candy Crush – where players are willing to pay to keep playing,” Web 3 analyst DeFi Vader wrote in a note last August about Axie Infinity. “If one or a few of those games create organic engagement, then DAU growth may stop being mostly dependent on daily earnings.”
Read The Full Story Here: Metaverse Majors Struggle as User Base Falls Short of Market Expectations
Today’s newsletter was edited by Omkar Godbole and produced by Parikshit Mishra and Stephen Alpher.
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