First Mover Asia: Bitcoin Holds Steady Over 20K, USDC's ‘Flippening’ of USDT and the Stablecoin Bear Market

Ether and most major altcoins spent much of the day in the green; a crisis in confidence has put pressure on the USDT peg.

AccessTimeIconJun 21, 2022 at 11:30 p.m. UTC
Updated May 11, 2023 at 5:30 p.m. UTC

Good morning. Here’s what’s happening:

Prices: Bitcoin clings tight near $21,000; ether also rises.

Insights: USDC's may be "flippening" of USDT, and the stablecoin bear market continues.

Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis. And sign up for First Mover, our daily newsletter putting the latest moves in crypto markets in context.


Bitcoin (BTC): $20,621 +0.9%

Ether (ETH): $1,124 +1.7%

Biggest Gainers

Asset Ticker Returns DACS Sector
Shiba Inu SHIB +30.7% Currency
Dogecoin DOGE +10.6% Currency
Polygon MATIC +7.8% Smart Contract Platform

Biggest Losers

Asset Ticker Returns DACS Sector
Cardano ADA −1.0% Smart Contract Platform
Polkadot DOT −0.1% Smart Contract Platform

Bitcoin Rises – for Now; Ether Is in the Green

So far, so good this week in crypto markets, but investors may not want to raise their hopes for a long-term rebound.

The largest cryptocurrency by market capitalization gained ground for a third consecutive day, jumping past $21,000 on Tuesday. Bitcoin was recently trading at about $20,600, up about 1% and far removed from the two-year low of under $18,000 it hit on Saturday.

Still, analysts were pessimistic about the rally's staying power, noting a rise in volatility perhaps tied to large investors buying on price dips and citing troubling underlying conditions that include global turbulence, rising prices and stress about a possible recession. All of that has plagued crypto markets for the past eight months. Investors are scared, and the occasional surge notwithstanding, may have assumed a defensive crouch until evidence emerges that the economy is on a longer upturn, analysts say.

Last month's collapse of the TerraUSD stablecoin (UST) and more recent fiascos involving the decentralized finance (DeFi) lending platform Celsius and crypto hedge fund Three Arrows have further stoked investors' fears.

"Last week was bad," Jeff Dorman, chief investment officer of digital investment management firm Arca, told CNBC. "It was not unprecedented in the sense that we've had multiple 30% to 50% moves in short periods of time. But it was historically bad in the sense that it was the first time it was happening in conjunction with bad things happening everywhere else."

Ether, the second-largest crypto by market cap, was recently trading at $1,130, up 1.7%. Other major altcoins were in the green, with DOGE up 10% and SOL rising more than 5%.

Cryptos' price increases dovetailed with equity markets, which rose amid investors' likely temporary return to riskier assets. The tech-focused Nasdaq climbed 2.5%, while the S&P 500, which has a heavy tech component, rose by nearly the same.

Still, in a Monday report, Goldman Sachs economists upped the likelihood of a recession to 30% from their previous prediction of 15%. Investors will be nervously watching Federal Reserve Chairman Jerome Powell's testimony before Congress on Wednesday and Thursday. Powell has been adamant about the Fed's more aggressive moves to tame U.S. inflation in raising interest rates and reducing liquidity in the economy.

Arca's Dorman said that he expects crypto investors to continue "to hunker down," and that will translate to "less growth from growth companies in the [crypto] space, in hiring and new product launches." Last week, as bitcoin's price sank, investors redeemed a net $5.8 million from short bitcoin funds in the seven days through June 17, crypto asset manager CoinShares wrote Monday in a report. (A "short" position in financial markets is a bet on a price decline.)

Yet Dorman noted that the current crash differs significantly from earlier steep downturns in crypto's history because of the range of products and services now available. "I think people are going to flock to DeFi much faster than anyone expected because it holds up," he said. He was sanguine about the prospects of a recovery this year.

"My guess would be we probably start to see higher prices in the second half of this year," he said. "There really isn't a lot of carnage in the applications themselves."


S&P 500: 3,764 +2.4%

DJIA: 30,530 +2.1%

Nasdaq: 11,069 +2.5%

Gold: $1,833 -0.3%


USDC's ‘Flippening’ of USDT and the Continuation of the Stablecoin Bear Market

Tether (USDT) has been of particular interest to the crypto industry after last month's collapse of LUNA, because like with UST, there has been a lot of skepticism about what exactly is backing it. Interest in the reserves that back USDT isn’t new, but the general crisis of confidence in crypto has placed more pressure on USDT’s tenuous peg.

Recently, the number of transactions on USDC surpassed those on USDT. For long-time, stablecoin war observers, that's a substantial "flippening." USDT’s share of the supply of stablecoins in smart contracts is dropping fast. What began at around 20% in January is now dipping to 13%. But what is unexpected is that USDC, which doesn’t have the same questions about its reserves as they are properly held in trust, is also seeing its price drop.


This is largely a product of the primary use case for stablecoins, DeFi platforms have seen their locked-in value decline significantly since the beginning of the year. What was once a $236 billion market when the year began, according to DeFiLlama, now has only $74 billion locked in as traders flee.

With that comes a big decline in the number of active addresses on both USDT and USDC, which is to be expected because the liquidity contributed to these protocols is often in stablecoins.


But again, all this seems to be a problem localized in the worlds of DeFi and stablecoins. Even as the price of bitcoin declines as institutions and miners sell, retail investors continues to buy what they can with the number of wallets containing more than 0.1 BTC rising from 3.4 million as of May 16 to around 3.6 million by Tuesday, according to Glassnode data.

So while there might be trouble in the land of digitized dollars and DeFi, there’s still confidence in digital gold (though its analog version might have been a better investment).

Important events

The 4th annual NFT Industry Event (NFT.NYC)

2 p.m. HKT/SGT(6 a.m. UTC): UK consumer price index (MoM/YoY/May)

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

Bitcoin bounced back to over $21,000. But how long will the relief rally last? Simeon Hyman of ProShares Global joined "All About Bitcoin" to discuss the bitcoin market and the ProShares Short Bitcoin Strategy ETF that launched today. Also, Nelson Hsieh of Volt Equity weighed in on the bipartisan crypto bill introduced by Sens. Cynthia Lummis (R.-Wyo.) and Kirsten Gillibrand (D.-N.Y.). Volt Equity believes it could it be a boon for the bitcoin mining industry.


'Enormous Outflows' From Largest Bitcoin ETF May Have Triggered BTC Crash: The Canadian Purpose Bitcoin ETF lost half of its assets last Friday likely because of a huge liquidation, an Arcane Research analyst said in a note.

CoinShares Report Shows Major Outflows From Bitcoin Short Funds: Digital-asset investment products see $39 million in outflows last week, with total assets under management reaching their lowest level since February 2021.

Miner Bitfarms Sold Almost Half Its Bitcoin to Reduce Debt: The miner sold 3,000 BTC in the past week to improve liquidity and reduce indebtedness.

BlockFi Receives $250M Credit Facility From FTX: The proceeds will be used to fulfill client balances across all accounts.

Solana NFT Marketplace Magic Eden Raises $130M at $1.6B Valuation: The large raise comes during an otherwise downcast crypto climate.

Longer reads

FUD or Facts? Terra, Celsius Show Value of Asking Questions: Kicking the tires on crypto projects and holding people accountable for flaws within them is how the industry will improve and grow.

Said and heard

3oSE...uRbE has started moving funds (Solent Protocol for lending and borrowing on Solana/Twitter) ... "One thing most people don't fully grasp: it takes years, often decades, to go from a new infrastructure-level technology breakthrough (like crypto) to a vibrant ecosystem of mainstream applications. (Paradigm co-founder Fred Ehrsam) ... "Today @BlockFi signed a term sheet with @FTX_Official to secure a $250M revolving credit facility providing us with access to capital that further bolsters our balance sheet and platform strength. (BlockFi CEO Zac Prince/Twitter) ... "Approval of an ETF that provides inverse exposure to #Bitcoin futures could be a positive sign for #crypto. Here’s a 🧵 on why..." (Grayscale Investments CEO Michael Sonnenshein)

CORRECTION (June 21, 2022, 23:58 UTC): Bitcoin's price over the weekend hit a two-year low.


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James Rubin

James Rubin was CoinDesk's U.S. news editor based on the West Coast.