First Mover Americas: Coinbase Layoffs and the 'Bear Market Guide' to Bitcoin

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.)

Bitcoin (BTC) slid for an eighth straight day, its longest losing streak since January 2016, as U.S. stocks joined cryptocurrencies in a bear market.

Some $1 billion of cryptocurrency futures contracts and derivatives were liquidated due to margin calls over just 24 hours.

The big U.S. cryptocurrency exchange Coinbase disclosed plans to lay off some 1,100 employees, or roughly 18% of its workforce, as part of a cost-cutting plan. Analysts for the Wall Street firm JPMorgan cut Coinbase's stock rating to neutral, and the shares slumped.

"This is very bad, especially for those holding their coins there, but also for the industry as a whole," wrote Mati Greenspan, founder of the cryptocurrency and foreign-exchange analysis firm Quantum Economics, wrote Monday in a newsletter. "There isn't much optimism right now. It's been a very brutal bear market."

European shares traded lower on Tuesday, but U.S. stock futures appeared to be bouncing prior to the open of trading in New York. Gold was down 0.5% to $1,823 an ounce; crude oil rose 1% to $122 a barrel.

The 10-year U.S. Treasury bond yield was down a 0.06 percentage point to 3.31%.

Read More: Morgan Stanley Says Ether Underperformance Echoes Crypto Downturn of 2018

The Federal Reserve's campaign to tighten monetary conditions – to help contain inflation running at its fastest in four decades – has put extreme pressure on assets across the board, from cryptocurrencies to stocks and bonds.

The U.S. central bank starts a two-day closed-door meeting on Tuesday, and traders are speculating over its likely decision, to be announced Wednesday at 2 p.m. ET.

Fed officials had telegraphed the likelihood of a 0.5 percentage point increase, but now some analysts are warning that a hike of 0.75 percentage point or even a full percentage point might be in the cards.

The "S-word" (stagflation) is on the lips of investors: "We believe we're moving toward an environment of persistent high inflation coupled with weak real growth. In other words, stagflation," Kyle Delaney, president of the giant hedge fund Bridgewater, wrote in a communiqué to investors.

Fitch, the bond-rating service, cut its estimate of global gross domestic product growth in 2022 by 0.6 percentage point to 2.9%. "Global inflation pressures continue to intensify, with increasingly adverse implications for the growth outlook," wrote Brian Coulton, Fitch's chief economist.

Underscoring the theme du jour, the crypto exchange Bybit unveiled its "first-ever Bear Market Guide for traders."

"Featuring a contemporary design that draws inspiration from popular culture, the guide shares a pool of resources that can help investors put the bear market situation into perspective," Bybit said in a press release from Seychelles.

In the current economic environment, what else is there for a trader to do?

Today’s newsletter was edited by Bradley Keoun and produced by Parikshit Mishra.