First Mover Americas: Bitcoin Retakes $30K as 'Institutional Adoption' Makes Crypto More Like Stocks

The latest moves in crypto markets in context for May 17, 2022.

AccessTimeIconMay 17, 2022 at 1:00 p.m. UTC
Updated Apr 14, 2024 at 10:51 p.m. UTC

Good morning, and welcome to First Mover. I’m Brad Keoun, here to take you through the latest in crypto markets, news and insights. (Lyllah Ledesma is off this week.)

  • Price point: Bitcoin retakes $30,000, but few analysts are ready to call a market bottom.
  • Market Moves: Everyone celebrated the arrival of institutional investors to the bitcoin market, as their rising adoption helped send prices soaring. Now, with correlations to traditional markets at an all-time high, fingers are pointing over the market swoon, Helene Braun reports.
  • Feature: Terra’s LUNA token gains and then slides, after blockchain founder Do Kwon proposes to create a separate chain or "fork" to make up for last week’s implosion of the UST stablecoin, Shaurya Malwa reports.
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  • Price Point

    Bitcoin (BTC) was recently back above $30,000 after losing the crucial foothold on Monday.

    With crypto markets still looking wobbly after last week's crisis on the Terra blockchain, any signs of stabilization should be heartily welcomed by bitcoin bulls. Arcane Research, a Norwegian cryptocurrency analysis firm, wrote Monday that the market could get a jolt of fresh energy if bitcoin ends the week over $32,000.

    For the time being, though, "there is little reason to argue that a prolonged rise will follow the current buying, as the fundamentals (tightening markets, slowing economy) remain in place," Alex Kuptsikevich, FxPro senior market analyst, wrote in emailed comments.

    Ether (ETH) added 2.2% in the past 24 hours to trade above $2,000, with similar gains for Avalanche’s AVAX, BNB Chain’s BNB, and dogecoin.

    Polygon’s MATIC (MATIC) gained 5.5% as Polygon Studios CEO Ryan Wyatt said the firm was working with Terra projects affected by last week’s implosion and would connect them to Polygon’s broader DeFi (decentralized finance) network. Terra held billions of dollars in value on various DeFi applications, such as Anchor, before last week’s fall.

    In traditional markets, U.S. stock futures were higher ahead of Tuesday's exchange open in New York, along with gold. The yield on the 10-year U.S. Treasury note was up 0.04 percentage point to 2.92%. The U.S. dollar index (DXY) was down 0.8%.

    The uplift in global markets came as traders priced in expectations of relaxation of rules in Shanghai after weeks of strict lockdowns, leading to a bump in Chinese stocks. Policymakers in Beijing are taking steps to alleviate the economic slowdown, with various moves in the past week.

    Traders could get fresh clues on U.S. central bankers' latest plans to tamp down fast-rising inflation from a 2 p.m. ET (18:00 UTC) appearance by Federal Reserve Chairman Jerome Powell.

    Market Moves

    By Helene Braun

    A key narrative in the crypto world in 2021 was the arrival of institutional investors to the market. Tesla (TSLA) bought $1.5 billion worth of bitcoin and Wall Street banks like JPMorgan Chase (JPM) and Morgan Stanley (MS), as well as hedge funds, started to allocate clients' assets to bitcoin.

    That was a sign of growing mainstream acceptance, and it appeared to drive up prices. Crypto boomed with the sector’s market capitalization growing 185% last year.

    Now, as the crypto market's latest swoon wipes off $1.25 trillion from the industry's all-time high market capitalization reached late last year, the question is, what role is institutional money playing in the crash? Or to put it more bluntly, are institutional investors making things worse?

    One thing we know: The crypto market is increasingly correlated to the stock market, and institutional investors appear to have heightened that correlation. And when the stock market goes down, it takes crypto with it.

    “The influx of institutional interest in BTC, which started to pick up in early 2020 with public declarations of interest from stalwarts of traditional investing, such as Paul Tudor Jones and Renaissance Technologies, coincides with a sustained jump in the 60-day correlation between BTC and the S&P 500,” a report in April by Genesis Trading stated. (Genesis is a subsidiary of Digital Currency Group, which also owns CoinDesk.)

    Latest Headlines

    Terra’s LUNA Gains, Then Slides, After Do Kwon's Fork Proposal

    By Shaurya Malwa

    Terra’s LUNA shed nearly a quarter of its value in the past 24 hours after a proposed revival plan revealed by Kwon, the founder, data shows.

    LUNA rose to as much as $0.00022 on Monday evening as plans to fork the current Terra blockchain went viral on social media. It then shed as much as 22% in early Asian hours to trade at just over $0.00017 at writing time. Some $2.1 billion worth of the tokens were traded in the past 24 hours alone.

    The token is down more than 99% since its high in April of nearly $120. The drop came as excess LUNA was put into circulation last week to prevent the collapse of terraUSD (UST), a Terra ecosystem stablecoin pegged to U.S. dollars, as reported.

    Sentiment remains mixed for the proposal among the crypto community.

    Some said they would support the new chain and anticipated the airdrop to prior holders. Others suggested the plan was unfair, as it could vastly benefit investors who purchased massive amounts of LUNA at a few pennies more than those who purchased the tokens when they were valued above $100. To combat this, however, Kwon proposed holding two snapshots – one prior to UST’s collapse and one after – and airdropping equivalent amounts of new tokens.

    Today’s newsletter was edited by Brad Keoun and produced by Parikshit Mishra and Stephen Alpher.

    CORRECT (May 18, 3:55 UTC): Removes reference to Ben Delo in Latest Headlines section. An earlier version of this story said Delo would also be sentenced on Friday.


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    Bradley Keoun

    Bradley Keoun is the managing editor of CoinDesk's Tech & Protocols team. He owns less than $1,000 each of several cryptocurrencies.

    Helene Braun

    Helene is a New York-based reporter covering Wall Street, the rise of the spot bitcoin ETFs and crypto exchanges. She is also the co-host of CoinDesk's Markets Daily show. Helene is a graduate of New York University's business and economic reporting program and has appeared on CBS News, YahooFinance and Nasdaq TradeTalks. She holds BTC and ETH.

    Shaurya Malwa

    Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.

    Parikshit Mishra

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