Bitcoin (BTC) continued to trade sideways on Wednesday, indicating a pause in bearish sentiment among traders.
However, most alternative cryptos traded higher on Wednesday, paring losses from last week. For example, Decentraland's MANA token was up by 3% over the past 24 hours and is roughly flat over the past week. Meanwhile, The Sandbox's SAND token rose by 7% on Wednesday. MANA and SAND are metaverse tokens, used to exchange value in a virtual game setting.
Just launched! Please sign up for our daily Market Wrap newsletter explaining what happens in crypto markets – and why.
Also, on Wednesday, the U.S. Federal Reserve published minutes from its committee meeting of earlier this month, which indicated that multiple 50 basis point interest rate increases could occur over the next several meetings.
Stocks traded slightly higher, while gold and the 10-year Treasury bond yield ticked lower over the past 24 hours.
●Bitcoin (BTC): $29,578, +0.68%
●Ether (ETH): $1,950, −0.59%
●S&P 500 daily close: 3,979, +0.95%
●Gold: $1,853 per troy ounce, −0.64%
●Ten-year Treasury yield daily close: 2.75%
Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.
More volatility ahead
Range-bound price action typically results in a volatile breakout or breakdown.
For example, a similar rise in open interest occurred shortly before a short squeeze in July of last year when BTC was trading around $30,000. But a rise in open interest also coincided with BTC's price peak of around $48,000 in March, and remained elevated during subsequent sell-offs in price, according to Arcane.
With so much uncertainty, traders have been unwilling to express a strong bullish or bearish bias. For example, funding rates, or the cost to fund long and short positions in the perpetual futures market, have been moved between neutral and negative over the past few months. That means traders holding short positions have been dominant in the market, willing to pay long traders to express a bearish view.
Still, funding rates have not been deeply negative in a while, which typically occurs around price bottoms. Likewise, extreme rises in funding rates have typically occurred around price peaks. That suggests the excess speculative activity that defined the 2020-2021 bull market has receded.
- Terra 2.0 and LUNA airdrop incoming: Revival plans for the Terra blockchain are taking shape two weeks after the network’s stablecoin (UST) and its native token (LUNA) fell to nearly zero. There has been a heated debate about what's next for Terra, with the community being divided. The conclusion is a launch of a parallel “Terra 2.0” later this week, with a plan to compensate LUNA holders gradually over time to mitigate selling pressure. Validators, which run the blockchain and stake LUNA by managing staking pools, approved the revival plans, much to the dismay of the Terra community’s majority, including one of the largest decentralized finance platforms, Lido, voting against supporting the new Terra blockchain. Read more here.
- ETH merge in a bear market: The second-largest blockchain’s long-anticipated (and delayed) transition to proof-of-stake may finally be ready in August. For a while, the upcoming Merge was hyped to send ether’s price to the moon – even speculating about surpassing bitcoin in an event called the “flippening.” But market conditions have drastically changed since then (Fed tightening, risk-asset sell-off, war, decades-high inflation and so on), and the Merge’s desired impact on the price may well turn out to be lukewarm. Read more here.
- Whales ditched Tether to USDC: Terra’s UST failure prompted a shake-up on the stablecoin market, and large investors have a new favorite. Data by CoinMetrics shows that crypto whales – addresses that hold more than $1 million – on the Ethereum blockchain left Tether’s USDT for the perceived safety of its biggest competitor, USDC. Since Terra’s collapse, USDT saw $10 billion in redemptions. It’s still the most popular stablecoin – cryptocurrencies with a price pegged to another asset, usually to the U.S. dollar – but USDC gained about $5 billion, eating into USDT’s market share. Read more here.
- Consider Digital Assets Instead of Still-Pricey Real Estate, Say JPMorgan Strategists: Nikolaos Panigirtzoglou and team mull the outlook for crypto following the Terra collapse.
- Andreessen Horowitz Establishes $4.5B Crypto Fund, Its Fourth: The Silicon Valley venture capital firm is doubling down on its crypto investments despite the market downturn.
- OCC Chief Hsu: Crypto Industry Has Unhealthy ‘Dependency on Hype’: The acting head of the U.S. Office of the Comptroller of the Currency has worked to limit banks’ involvement in cryptocurrencies.
- As Bitcoin Price Slides, Older Mining Rigs Are Becoming Less Profitable: Even as Bitcoin's mining difficulty adjusts downward, the price trend might spell a crisis for retail miners. On the other hand, it could be an opportunity for those looking to buy rigs.
- Wormhole Bridge Expands to Cosmos Ecosystem: The Jump-backed cross-chain connector will integrate with Injective, an EVM-compatible chain in the Cosmos ecosystem. It becomes Wormhole’s 11th chain.
- Binance to Advise on Crypto Strategy as Kazakhstan Looks to Boost Industry: The country known as a bitcoin mining hub is trying to attract more crypto firms and broaden the industry.
- FTX’s Bankman-Fried Pitches CFTC on Directly Clearing Customers’ Crypto Swaps: The crypto exchange’s founder and CEO made his case at a Washington, D.C., roundtable, while mainstream derivatives firms painted his ideas as dangerous.
- Celestia Launches Testnet for First Modular Blockchain Network: The “Mamaki” testnet could bring an end to what the project calls the “monolithic era” of layer 1 blockchains.
- Defining Cryptocurrency Regulation Important for the Industry to Grow: Morgan Stanley: Disagreement on new legislation would be negative and lead to an extended period of uncertainty, the bank said.
- Avalanche Submits Subnet Proposal for ApeCoin DAO’s Metaverse Migration: The proposal comes weeks after Otherside faced issues on Ethereum.
- NFL Taps Mythical Games for First Play-to-Earn Venture: The football league is continuing its crypto push with an NFT game to be released in early 2023.
Most digital assets in the CoinDesk 20 ended the day higher.
|Ethereum Classic||ETC||+2.0%||Smart Contract Platform|
|Stellar||XLM||+0.8%||Smart Contract Platform|
|Polygon||MATIC||+0.8%||Smart Contract Platform|
|Solana||SOL||−1.6%||Smart Contract Platform|
Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.