First Mover Asia: Bitcoin, Altcoins Climb Following Fed Reserve Chief's Inflation Reassurances

The head of the U.S. central bank told the Senate Banking Committee the Fed would continue its tactics to combat rising inflation.

Jan 11, 2022 at 11:25 p.m. UTC
Updated Jan 11, 2022 at 11:25 p.m. UTC

Good morning. Here’s what’s happening:

Market moves: Bitcoin led a broad crypto recovery ahead of the U.S. CPI release.

Technician’s take: Buyers started to return to the market, although the upside seemed limited to the $45,000 level.

Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis.

Prices

Bitcoin (BTC): $42,806 +2.4%

Ether (ETH): $3,240 +5.2%

Markets

S&P 500: $4,713 +0.9%

DJIA: $36,252 +0.5%

Nasdaq: $15,153 +1.4%

Gold: $1,821 +1.1%

Market moves

Bitcoin went up as high as $43,106 on Tuesday, leading a broad market recovery in crypto. The move came after the stock market in the U.S. halted its five-day rout ahead of the Consumer Price Index (CPI) data release on Wednesday.

At the time of publication, the most valued cryptocurrency was changing hands above $42,800, up over 2% in the past 24 hours, according to CoinDesk data.

(CoinDesk)

Bloomberg reported the stock market climbed on Tuesday after Jerome Powell, the chair of the Federal Reserve, reassured investors the Fed will combat the current high inflation, signaling the central bank may reduce its balance sheet this year.

As CoinDesk reported, bitcoin and the broad crypto market have behaved strongly like a risk asset recently.

A key event to watch on Wednesday is the release of December’s U.S. consumer price index (CPI). Economists anticipate a 0.5% month-to-month increase in CPI to 7.1%.

In the past two months, bitcoin’s price experienced high volatility after the CPI data release. While some crypto traders and investors view bitcoin as a hedge against inflation, others consider it as a risk asset like stocks, which react to tightened monetary policy resulting from high inflation.

Most other major cryptocurrencies also rose on Tuesday. Ether, the second-biggest cryptocurrency by market capitalization, was up over 5% to above $3,200, at the time of publication. Layer 1 token NEAR remained the biggest winner. It is up nearly 13% over the past week despite the crypto sell-off.

Technician’s take

Bitcoin daily price chart shows support/resistance, with RSI on bottom. (Damanick Dantes/CoinDesk, TradingView)

Bitcoin (BTC) went trading above the $40,000 support level and was up about 3% over the past 24 hours from 9 p.m. UTC. Buyers are starting to return to the market, although the upside appeared to be limited to the $45,000 resistance level, which is also near the 200-day moving average.

On intraday charts, upside momentum is improving, which suggests buyers could remain active into the Asia trading day.

BTC is the most oversold since Dec. 10, according to the relative strength index (RSI) on the daily chart. Typically, oversold readings precede price recoveries, similar to what occurred in late September. This time, however, price reaction to the RSI and other indicators have been delayed.

Still, on the weekly chart, the RSI is not yet oversold, which decreases the chance of significant buying pressure.

Important events

Australia Housing Industry Association new home sales (MoM Dec.)

8 a.m. HGT/SGT (12 a.m. UTC): Australia and New Zealand commodity price (Dec.)

9 a.m. HGT/SGT (1 a.m. UTC): Bank of Japan Governor Haruhiko Kuroda press conference about monetary policies

9:30 a.m. HGT/SGT (1:30 a.m. UTC) China consumer price index (Dec. MoM/YoY)

9:30 p.m. HGT/SGT (1:30 p.m. UTC) U.S. consumer price index (Dec. MoM/YoY)

CoinDesk TV

In case you missed it, here are the most recent episodes of “First Mover” on CoinDesk TV:

"First Mover" hosts spoke with Kevin O'Leary, aka Mr. Wonderful, for his view on the booming NFT market and the DeFi space. In addition, venture investor and Pantera Capital Partner Paul Veradittakit shared his crypto outlook for 2022. Plus, CoinDesk Managing Editor for Global Policy and Regulation Nikhilesh De shared the latest investigative report on Trump-era crypto policy.

Latest headlines

Paradigm, Sequoia to Invest $1.15B in Citadel Securities: The move brings Ken Griffin’s Citadel closer to the world of crypto.

GameFi NFT Marketplace Lootex Closes $9M Funding Round: The Taiwan-based asset marketplace features over 12,000 NFTs across 500 collections.

Unstoppable Domains Launches NFT-Based Sign-On for Ethereum and Polygon: So-called utility NFTs can also be used to mark positions in DeFi or prove membership in communities, said Unstoppable chief Matthew Gould.

The Mnuchin Files: New Documents Shed Light on Trump-Era Crypto Policy: Jared Kushner advocated behind the scenes for a U.S. digital currency, among other revelations in a 250-page trove from Steven Mnuchin’s tenure at Treasury.

Axie Infinity’s Gaming Sidechain Is Bigger Than Many Major Layer 1s by Volume: Nansen: If the future of blockchain is multi-chain, then Axie’s Ronin is leading the way, according to new research.

Longer reads

Is Moxie Marlinspike Right About Web 3?: Crypto may not be as decentralized as its proponents claim.

Today’s crypto explainer: What Are Privacy Coins and Are They Legal?

Said and heard

“We mustn’t become exploited by the metaverse. Rather, it should serve us. For that to happen, it needs a constitution.” (Binomial co-founders and tech entrepreneurs Stephanie Hurlburt and Rich Geldreich for CoinDesk) ... ”Yet, even multinational companies have a boss: the public. Apple’s privacy push and Facebook’s rebrand show that no matter the size of the company, public opinion reigns supreme. If the public displays enough appetite for a metaverse constitution, Big Tech’s hands will be tied.” (Hurlburt and Geldreich for CoinDesk) ... “If we see inflation persisting at high levels longer than expected, if we have to raise interest rates more over time, we will. We will use our tools to get inflation back.” (Jerome Powell testifying before Senate Banking Committee) ... “The Fed needs to take seriously the systemic risks that threaten our economic progress, like cryptocurrencies and stablecoins and most importantly, climate change.” (Ohio Sen. Sherrod Brown at Powell hearing) ... “But the most important factor is automation. And automation-fueled inequality is “not an act of God or nature,” he added. “It’s the result of choices corporations and we as a society have made about how to use technology.” (MIT economist Daron Acemoglu in The New York Times)..."DeSo (which formerly operated as BitClout) is in principle an exemplar of what Web 3 could become. The system is built around token economics intended to help content creators get paid for their work, and users to manage their DeSo assets using digital wallets analogous to MetaMask or Samourai." (CoinDesk columnist David Morris)

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Muyao is a reporter on the markets team. She is based in Brooklyn, New York. She owns a marginal amount of bitcoin.

Damanick is a crypto market analyst at CoinDesk where he writes the daily Market Wrap and provides technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio manager at Cannon Advisors, which does not invest in digital assets. Damanick does not own cryptocurrencies.