Good morning. Here’s what’s happening:
Market moves: Bitcoin fell as U.S. stocks dipped further on hot inflation data.
Technician's take: BTC is approaching overbought levels, although pullbacks could stabilize at between $40K and $43K.
Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis.
Bitcoin (BTC): $43,807 -1.4%
Ether (ETH): $3,105 -4.1%
S&P 500: 4,504 -1.8%
DJIA: 35,421 -1.4%
Nasdaq: 14,185 -2.1%
Gold: $1,826 +1%
Bitcoin (BTC) struggled to remain above $44,000 on Thursday, as U.S. stocks fell further following hawkish remarks by a Federal Reserve official.
Responding to a surprisingly high rate of inflation, Federal Reserve Bank of St. Louis President James Bullard said he supported raising interest rates by a full percentage point by July, Bloomberg reported. His comments came after the U.S. Labor Department on Thursday reported that the consumer price index (CPI) for January hit 7.5%, which was higher than what analysts had expected.
Bitcoin started falling as stock prices declined further from an initial drop earlier in the day. At the time of publication, the oldest cryptocurrency was changing hands at $43,807, down 1.4% in the past 24 hours, according to CoinDesk data.
Meanwhile, ether, the second-biggest cryptocurrency by market capitalization, was down over 4% to $3,105 in the same period.
“Things like gold and BTC often have a brief drop in hot CPI prints because the market starts quickly assuming faster rate hikes by the Fed,” Lyn Alden Schwartzer, founder of Lyn Alden Investment Strategy, explained in a tweet on Thursday.
Bitcoin's spot trading volume across centralized exchanges also rose on Thursday from a day ago. Trading volume in general was higher than a week ago, based on data compiled by CoinDesk.
Bitcoin has traded in a choppy range at between $43,249 and $45,843 over the past 24 hours.
Buyers reacted quickly to a nearly 5% price drop early in the New York trading session and maintained short-term support at above $43,000.
The next level of resistance is at $46,710, which represents a 38% retracement of the previous two month-long downtrend. Buyers could start to exit positions as BTC approaches resistance heading into the Asia trading session.
For now, momentum signals are improving on intraday charts, although price action is volatile following the U.S. inflation report. Stronger resistance is seen at $50,000 if buyers sustain short-term momentum.
Pullbacks could stabilize in the $40,000-$43,000 range.
10 a.m. HKT/SGT (2 a.m. UTC): Reserve Bank of New Zealand inflation expectations (Q4/QoQ)
3 p.m. HKT/SGT (7 a.m. UTC): U.K. goods trade balance (Dec.)
3 p.m. HKT/SGT (7 a.m. UTC): U.K gross domestic product (Q4/QoQ/YoY preliminary)
3 p.m. HKT/SGT (7 a.m. UTC): U.K. industrial production (Dec. MoM/YoY)
"First Mover" hosts spoke with Matthieu Jobbé-Duval of Dapper Labs for insights into the possible factors contributing to the surge of FLOW tokens. Scott Melker, "The Wolf of All Streets" crypto trader, shared his crypto market analysis as the U.S. CPI number jumped to a 40-year high, and Brandon Buchanan, Meta4 Capital founder and managing partner, shared his views on Web 3.
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US Inflation Hits New 4-Decade High of 7.5% in January: Bitcoin traders keep track of the inflation rate because some think of the cryptocurrency as an inflation hedge, and the Federal Reserve's expected response to economic conditions often dictates market direction.
Crypto M&A Surged Nearly 5,000% in 2021, PwC Report Says: The average deal size more than tripled from 2020 to $179.7 million.
Ransomware Payments Are Getting Bigger As Hackers Shift Focus to Larger Targets: Chainalysis: New research from blockchain surveillance firm Chainalysis shows that ransomware gangs are getting more sophisticated.
Fitch Downgrades El Salvador to ‘CCC’ Weeks Before Bitcoin Bond Issue: Concerns over the country's ability to service debt, concentration of power in the presidency and adoption of bitcoin as legal tender drove the downgrade.
Caitlin Long's Wyoming Crypto Bank Takes a Step Toward Fed Membership: It's no guarantee of Fed approval, but Avanti Bank now has a routing number through the American Bankers Association.
4 Unanswered Questions About the Bitfinex Hack: Even after high-profile arrests, we don't have the full story behind the $4.6 billion crypto heist.
Today's crypto explainer: Crypto Trading 101: Bull and Bear Flags (And What They Mean for Price)
Said and heard
"To some extent, crypto is playing by a new set of rules. It stands opposed to corporate and government power in trying to give people the ability to interact directly in a peer-to-peer fashion. It’s sold out a bit – giving an inch here and there for profits. It’s surrounded by rule-makers. It’s been forced to capitulate, sometimes." (CoinDesk columnist Daniel Kuhn) ... "For the industry to progress, gaming studios need to look backward to legacy developers." (Zach Hungate in an op-ed for CoinDesk) ... "I don’t think that just because Avanti has a routing number necessarily means they'll get a master account, but it’s typically a first step. You have to have a routing number before you can get a master account." (Alabama School of Law professor Julie Hill to CoinDesk) ... "Retailers and analysts predicted that the bulk buying in the early days of the pandemic, when supplies of many goods were constrained, would subside once people returned to work, stores were able to restock and vaccinations became widespread. Instead, Americans continue to stockpile food and household goods." (The Wall Street Journal)
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