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

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 Bradley Keoun, here to take you through the latest in crypto markets, news and insights. (Lyllah Ledesma is off.)

  • Price Point: Bitcoin and cryptocurrencies were tumbling on Tuesday, quickly losing what had seemed to be a fresh burst of momentum on the prior day.
  • Market Moves: The Wall Street firm Morgan Stanley steps back and assesses the liquidity pressures recently hitting crypto markets, Will Canny reports.

Price Point

Bitcoin (BTC) was dumping on Tuesday, just a day after a price push past $31,500 kindled hopes that recently slumping cryptocurrency prices might have hit a bottom.

"The market dynamics this Tuesday morning are a reminder that the market cannot now rally again as it did in 2020," Alex Kuptsikevich, senior market analyst at FxPro, wrote in an email. "In our view, the bitcoin bear market is not over yet."

As of press time, the largest cryptocurrency was changing hands around $29,400, down 6% in the past 24 hours.

More than $200 million worth of positions on derivative exchanges were liquidated in the past 24 hours, according to Coinglass, CoinDesk's Oliver Knight reported.

Katie Stockton, managing partner of the technical-analysis firm Fairlead Strategies, wrote in a report that "long-term momentum remains to the downside," with support seen at $27,200.

Cryptocurrencies sold off broadly on Tuesday. Among the biggest losers were Solana's SOL token (-13%), Avalanche's AVAX (-13%) and Cosmos' ATOM (-9.7%).

The slide in bitcoin came as U.S. stock futures tumbled in overnight trading. There are renewed fears among investors of more central-bank monetary-policy tightening to control inflation.

Gold was higher, around $1,849 an ounce, and crude oil was holding steady at $118 a barrel.

Market moves

The Wall Street firm Morgan Stanley says crypto is getting hit by shrinking liquidity, Will Canny reports for CoinDesk.

Weakness in crypto markets, the failure of a dollar stablecoin and a reduction in leverage in decentralized finance (DeFi) are resulting in the “crypto equivalent of quantitative tightening,” Morgan Stanley (MS) said in a report Tuesday.

The recent collapse of stablecoin terraUSD (UST) saw tether (USDT) also lose its dollar peg intraday, and this caused crypto prices to drop further as some questioned the stability of the third-largest cryptocurrency, the bank said.

Investors are redeeming USDT at a record pace, the bank said. Some $10.6 billion of redemptions occurred in the last month alone, while other stablecoin issuance is not rising.

“Systemic spillover” risks from the crypto markets to the fiat banking system appear limited, the bank said, because the leveraged crypto companies usually borrow from each other. However, if USDT falls materially under its $1 peg, this would have a larger negative impact on crypto and risk markets.

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Today’s newsletter was edited by Bradley 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 less than $1,000 each of several cryptocurrencies.

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 less than $1,000 each of several cryptocurrencies.

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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