First Mover Americas: Bitcoin Heads for Record 8-Week Losing Streak

The latest moves in crypto markets in context for May 20, 2022.

AccessTimeIconMay 20, 2022 at 2:20 p.m. UTC
Updated May 20, 2022 at 4:01 p.m. UTC

Bradley Keoun is the managing editor of CoinDesk's Markets team. He owns BTC above CoinDesk's disclosure threshold of $1,000.

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

Parikshit Mishra is the news editor for CoinDesk during the mid Asia and early European hours. He does not have any crypto holdings.

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 has so far avoided a steeper tumble below the $30,000 level, but it's still poised to extend its losing streak to a record eight weeks.
  • Market Moves: Data from the bitcoin options market shows traders are leaning bearish, Shaurya Malwa reports.
  • Feature: The collapse in LUNA tokens were only part of the story. Crypto traders are rushing for the exits from DeFi apps on the Terra blockchain, Malwa reports.

Price Point

By one measure, cryptocurrency markets are going through their worst-ever stretch – and it's not over yet.

Bitcoin (BTC) has slid 3.2% since Sunday, poised to extend an already-at-a-record seven-week losing sreak.

It's notable the largest cryptocurrency by market capitalization has showed resilience around the $30,000 price level. But it sure hasn't staged much of a recovery since last week's full-blown sell-off in the wake of the stunning collapse of the Terra blockchain and its LUNA token.

Bitcoin at one point fell to nearly $24,000 but as of press time was changing hands around $30,300. There hasn't been much relief on the economic front, where growing concerns over a U.S. recession are colliding with a Federal Reserve that says it's determined to tamp down fast-rising inflation even as U.S. stocks appear poised to enter a bear market.

The cryptocurrency's correlation with stocks has strengthened recently – partly because so many traditional investors are now trading it – so bitcoin is likely to face ongoing pressure from any tightening of financial conditions.

For what it's worth, the Wall Street firm Goldman Sachs (GS) put out a report predicting that the recent plunge in cryptocurrency prices won't in and of itself create much of a drag on the economy.

Even so, regulators are showing greater concern about the growing risks from crypto. A statement released by the G-7 called for tougher rules to counter money laundering and disclose reserves, after the collapse of stablecoin terraUSD last week, CoinDesk's Jack Schickler reported Friday.

In traditional markets, U.S. stock futures pointed to gains when the market opens on Friday, after China cut a key lending rate – a form of economic stimulus.

Market Moves

By Shaurya Malwa

CoinDesk - Unknown

Put/Call ratios reached a yearly peak on Thursday. (Delphi)

Activity on bitcoin (BTC) options suggests rising bearish sentiment among investors.

The asset’s price movements have been highly correlated to the U.S. markets in the past few months, with poor earnings reports and hawkish comments from the Federal Reserve showing an impact on bitcoin prices. Investors are placing bets accordingly.

Put/call ratios for bitcoin open interest hit a 12-month high of 0.72 Thursday, research firm Delphi said in a note Friday, adding that the data indicated “bearish sentiment among investors.” Similar ratio levels were reached last May. (A put option is, generally speaking, a bet on a price decline, while a call option is a bet on upside.)

“The put/call ratio measures the amount of put buying relative to calls,” Delphi analysts explained in the note. “A high put/call ratio indicates that investors are speculating whether bitcoin will continue to sell off, or it could mean investors are hedging their portfolios against a downward move.”

“Last April, the put/call ratio traded as high as 0.96 before Bitcoin’s price dropped over 50% in May 2021,” the firm added.

Latest Headlines

Feature: It’s Not Just LUNA. Terra’s DeFi Apps Have Hemorrhaged $28B

By Shaurya Malwa

In the two weeks since Terra's U.S. dollar-pegged stablecoin terraUSD (UST) lost its peg, causing massive investor losses, billions of dollars have been taken out of the ecosystem.

Data from trackers show funds held in decentralized finance (DeFi) applications built on Terra have slumped to $155 million in locked value as of Friday morning, a level last seen in February 2021, from more than $29 billion at the start of this month. Locked value on Terra DeFi peaked at $30 billion in early April.

The declines came as UST lost its 1:1 peg against the U.S. dollar amid a broader slump in markets. That created a death spiral as investors exchanged UST for other stablecoins, sending the LUNA token to as low as 4 cents on May 14.

“Experiencing significant losses, or seeing others take significant losses – at no fault of their own – is probably one of the fastest ways for a protocol or blockchain in this space to lose the trust of the community,” Simon Furlong, co-founder of Geode Finance, told CoinDesk in an email.

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

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Bradley Keoun is the managing editor of CoinDesk's Markets team. He owns BTC above CoinDesk's disclosure threshold of $1,000.

CoinDesk - Unknown

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

CoinDesk - Unknown

Parikshit Mishra is the news editor for CoinDesk during the mid Asia and early European hours. He does not have any crypto holdings.

CoinDesk - Unknown

Bradley Keoun is the managing editor of CoinDesk's Markets team. He owns BTC above CoinDesk's disclosure threshold of $1,000.

CoinDesk - Unknown

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

CoinDesk - Unknown

Parikshit Mishra is the news editor for CoinDesk during the mid Asia and early European hours. He does not have any crypto holdings.

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