Good morning. Here’s what’s happening:
Prices: Bitcoin rose significantly for a second consecutive day, despite disappointing earnings from the tech sector.
Insights: What's driving crypto traders' interest in World Cup-themed tokens?
Bitcoin Continues Its High-Flying Ways
By James Rubin
Bitcoin (BTC) continued its recent, mini surge, topping $21,000 at one point after Canada’s central bank raised its main interest rate less robustly than expected, and despite disappointing earnings late Tuesday by Google parent Alphabet and software giant Microsoft.
The largest cryptocurrency by market capitalization was recently trading at about $20,800, up more than 3.5% over the past 24 hours amid the Bank of Canada’s approval of a 50 basis point (BPS) hike instead of 75 BPS. The bank noted its concerns about the slowing of the economy. Central bankers globally have been trying to tame inflation without sparking a steep recession. On Tuesday BTC topped $20,000 for the first time since Oct. 5.
"Economic growth is expected to stall through the end of this year and the first half of next year as the effects of higher interest rates spread through the economy," the Bank of Canada said in a statement that noted its progress in cutting inflation to below 7% and underlined its concerns about declining economic growth.
Ether (ETH) was recently changing hands at $1,575, a nearly 8% gain from Tuesday, same time, tacking onto its more than 11% increase of the following day. The second-largest crypto in market value has reached its highest level since mid-September.
Most major altcoins were well in the green, with popular meme coins DOGE and SHIB recently up more than 14% and 5%, respectively. The former’s rise comes amid the approaching close of billionaire entrepreneur and DOGE enthusiast Elon Musk’s acquisition of social media platform Twitter.
The CoinDesk Market Index (CMI), a broad-based market index that measures the performance of a basket of cryptocurrencies, climbed 3.09% over the past 24 hours.
In traditional markets, U.S. stocks slumped after rising the previous two days as investors mulled over the tech industry’s struggles, which are likely to continue. Embattled social media platform.
Meta Platforms (FB) reported third-quarter revenue of just $285 million for its Facebook Reality Labs (FRL) division, which comprises its augmented and virtual reality operations, according to its earnings report released Wednesday. That was short of the consensus of analyst estimates of $406 million, and down from $452 million in the second quarter.
The tech-focused Nasdaq fell by about 2%, while the S&P 500, which has a strong tech component, dropped 0.6%. The Dow Jones Industrial Average (DJIA) was roughly flat. Both Microsoft and Alphabet earnings results killed what was becoming a "not too bad outlook for the economy," wrote Edward Moya, senior market analyst for foreign exchange market maker Oanda.
In commodities, Brent crude oil, a measure of energy markets, rose to $94 per barrel, up about 0.27% from the previous day. Three weeks after OPEC announced it was cutting production, investors remain fretful about energy prices. Brent crude is up more than 15% since the start of the year. Safe-haven gold was up 0.7% at $1,664 per ounce.
Housing starts plunged nearly 11% in September, continuing a recent trend that some observers of U.S. monetary policy hope will enable the Federal Reserve to ratchet back its recent monetary hawkishness. The most recent decline comes as mortgage rates top 7%, reaching a two-decade high.
The University of Michigan’s monthly Consumer Sentiment Index on Friday will offer fresh insight into the public’s perceptions about the economy. “Bitcoin is now comfortably above the $20,000 level and now it will try to stabilize here until the [Fed’s Federal Open Market Committee] meeting,” Moya wrote. “If risk appetite remains healthy, bitcoin could grind higher towards $22,500 level.”
Why Are Crypto Traders and Degens Interested in World Cup-Themed Tokens?
By Shaurya Malwa
You’d probably think of a sophisticated sports betting platform if someone said they wanted to bet on matches at the FIFA World Cup in Qatar.
But crypto schemers are doing one better. Crypto Twitter and niche altcoin Telegram groups are awash with discussions about countless tokens named after participating countries, players, stadiums and even the hosting country itself. The tokens are allowing speculators to weirdly bet on the prices of their favorites.
None of these tokens are licensed, or even affiliated, with any World Cup participants. That hasn’t stopped bettors from making big gains. A token called world cup inu surged some 500% in the past week alone, with others like CHAMPS and world cup token gaining at least 200% (before seeing price falls in the past 24 hours).
Not everything is a random scramble, however. As CoinDesk’s Omkar Godbole reported on Tuesday, some fan tokens issued on blockchain-based fan rewards platforms Socios and Bitci allow holders to contribute to merchandising, participate in exclusive meet-and-greet events and earn loyalty rewards.
In the past seven days, fan tokens of the Peruvian national football team (FPFT), Spain's national team (SNFT) and Brazil's national team (BFT) have rallied 29%, 17% and 12%, respectively, according to data source CoinGecko. Fan tokens of Turkish and Argentinian teams have risen by 10% and 9%, as reported.
Availability of capital
What’s driving the latest frenzy? The likes of Wes Hansen, director of trading and operations at crypto fund Arca, blames sidelined capital that’s looking to invest in, well, just about anything with a short-term narrative.
“There is a lot of cash on the sidelines waiting for any opportunity to invest, which is why short-term event trades have been the only way to generate decent returns for a few months now,” Hansen told CoinDesk in a recent chat.
He added: “When those conditions are coupled with a massive month-long event like the World Cup and the love this industry has for meme tokens, there are bound to be some savvy entrepreneurs that launch World Cup-themed tokens (ex. WCI and WILLIE).”
But hopeful investors should still exercise some caution, he noted. “These tokens just become high-velocity trading vehicles that have little to no intrinsic value or functionality and will disappear as soon as the event begins to wear on,” Hansen said, adding that that one of the interesting reasons behind the rise of such tokens was that that they give fans a way to “interact with and support their favorite teams.”
4:15 p.m. HKT/SGT(8:15 UTC) European Central Bank Monetary Policy Decision Statement
4:30 p.m. HKT/SGT(8:30 UTC) United States Durable Goods Orders (Sept)
4:30 p.m. HKT/SGT(8:30 UTC) United States Gross Domestic Product Annualized (Q3)
6:15 p.m. HKT/SGT(10:15 UTC) European Central Bank's President Lagarde Speech
7:00 a.m. HKT/SGT(23:00 UTC) Bank of Japan Monetary Policy Statement
"The Hash" team hashed out hot topics, including the crypto market surge, with bitcoin challenging $21,000. Plus, Google's Q3 earnings report revealed how crypto winter affected ad revenue. And, what's driving the popularity of Reddit NFTs?
Crypto Ad Spending Slowdown Contributes to Google’s Soft Quarter: The company's ad growth in the third quarter was its slowest in nine years.
Crypto Exchange SushiSwap Approves Restructuring, Will Create 3 Firms for DAO: The development of the decentralized autonomous organization will be managed by three organizations, which will be based in Panama and the Cayman Islands.
A16z's Largest Crypto Fund Loses 40% in First Half of 2022, the Wall Street Journal Reports: Andreessen Horowitz has slowed down its crypto investments, making just nine in the third quarter, compared with 26 in the fourth quarter of last year.
Ethereum’s Layer 2 Rollups Reduce Costs, but the Risks Are Underappreciated: Ethereum’s incumbent rollup networks cannot currently claim that they “borrow” Ethereum’s security.
UK Police Have Crypto Experts Stationed Nationwide: The police have managed to seize and store up hundreds of millions of pounds worth of cryptocurrency, but welcomes planned laws to ease seizures of crypto linked to crime and terrorism.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.