First Mover Americas: ECB (Finally) Exits Negative Rates as Bitcoin Digests Tesla Sales

The latest price moves in crypto markets in context for July 21, 2022.

AccessTimeIconJul 21, 2022 at 1:54 p.m. UTC
Updated May 11, 2023 at 6:44 p.m. UTC
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Good morning, and welcome to First Mover. We're Bradley Keoun and Shaurya Malwa, here to take you through the latest in crypto markets, news and insights.

(First Mover lead author Lyllah Ledesma is in Paris for the EthCC conference. Her dispatch from the conference on Wednesday is here. Spoiler alert: Ethereum's Vitalik Buterin was overheard ordering a hot water during one of Europe's worst heat waves in recent memory.)

  • Price Point: Crypto analysts were racing to assess the impact of Tesla's bitcoin sales as well as Thursday's decision by the European Central Bank to move to hike interest rates at an accelerated pace.
  • Market Moves: As crypto analysts scramble to assess whether the market bottom is in, Wall Street's JPMorgan is now weighing in. Oliver Knight reports.
  • JUST IN: The European Central Bank (ECB) on Thursday raised borrowing costs for the first time in 11 years, exiting the six-year era of the negative interest rate policy (NIRP). The ECB's exit from the NIRP is pivotal, since the unorthodox practice of setting borrowing costs below zero was considered by many as a sign of cracks in the traditional financial regime – a common theme among cryptocurrency analysts. Read Omkar Godbole's breaking story here.

This web version of today's First Mover newsletter was produced by Sage D. Young.

Price Point

Cryptocurrencies reversed Wednesday’s price gains as traders took profits after days of an uptrend, causing bitcoin to slip below $23,000 and majors taking hits of as much as 10% in the past 24 hours.

Solana’s SOL slid 8.8% to lead losses among majors. Cardano’s ADA fell 8%, dogecoin (DOGE) dropped 7%, while XRP and BNB fell nearly 5%. Ether dipped but continued to trade above the $1,500 level.

A drop in bitcoin prices came as electric carmaker Tesla said in an earnings report on Wednesday that it sold $936 million worth of bitcoin, or 75% of its holdings, in the second quarter. CEO Elon Musk cited “the uncertainty of the COVID lockdowns in China” as a crucial reason for its decision. Musk added the company did not trim its dogecoin holdings.

However, Musk said Tesla is open to increasing its bitcoin holdings again in the future and noted that the second-quarter sale "should not be taken as some verdict on Bitcoin.”

Analysts said retail investors should not take the bitcoin sale as a caution sign. “Having the billionaire’s company sell a majority of its BTC holdings shouldn’t necessarily be taken as a statement or reflection of Elon Musk’s position towards Bitcoin,” said Claudiu Minea, CEO of crowdfunding platform SeedOn in a Telegram chat. “This is likely more of a need for liquidity for the company as their profitability for Q2 has suffered due to the current downward trend for bitcoin’s price."

“Therefore, the decision to sell might be due to the need for cash on the balance sheet, rather than not seeing bitcoin as a valuable asset anymore,” Minea said.

Biggest Gainers

Asset Ticker Returns DACS Sector
Cosmos ATOM +8.1% Smart Contract Platform

Biggest Losers

Asset Ticker Returns DACS Sector
Gala GALA −10.2% Entertainment
Loopring LRC −8.0% Smart Contract Platform
Cardano ADA −7.8% Smart Contract Platform

Market Moves

By Oliver Knight

Wall Street analysts are signing on to a market thesis suggested by the sudden rally in digital-asset markets over the past week: That the worst of this year's price crash in cryptocurrencies might now be over.

Crypto analysts and traders warn that there might still be another price drop on the way. But the signals are turning more bullish.

Demand among retail investors in the crypto market is improving, and the "intense phase" of deleveraging appears to be over, JPMorgan Chase wrote Thursday in a report.

"The extreme phase of backwardation seen in May and June, the most extreme since 2018, appears to be behind us," the bank said.

Crypto markets have bounced back in recent weeks as investors anticipate the Ethereum "Merge" that is set to commence on Sept. 19.

Ethereum network activity has increased alongside an uptick in investor sentiment, JPMorgan said.

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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies 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 with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.

Bradley Keoun

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

Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.

Oliver Knight

Oliver Knight is a CoinDesk reporter based between London and Lisbon. He does not own any crypto.

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