Market Wrap: Bitcoin Rises on Encouraging Inflation News

The largest cryptocurrency hovered near $16.8K. Ether and other altcoins also surge.

AccessTimeIconNov 15, 2022 at 10:30 p.m. UTC
Updated Mar 3, 2023 at 6:54 p.m. UTC

Price Action

The latest inflation data on Tuesday suggested that the U.S. central bank was winning its campaign against inflation, and crypto investors relished the news.

Bitcoin was recently trading above $16,700, up more than 2% over the past 24 hours. The largest cryptocurrency has been inching up since Monday even as fallout from crypto exchange FTX’s liquidity crisis and filing for Chapter 11 bankruptcy protection widens. The Wall Street Journal reported that crypto lender BlockFi is preparing a potential bankruptcy filing because of its "significant exposure" to FTX.

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“Bitcoin is showing resilience here but it is hard to imagine investors are ready to test the waters until we learn more of the full contagion risk associated with FTX,” Edward Moya, senior market analyst for foreign exchange market maker Oanda wrote, although he warned that “if more exchanges or crypto companies pause withdrawals or limit activity, that will likely bring back the pressure on cryptos.”

Ether was recently changing hands at about $1,250, up more than 3% from Monday, same time. Other major altcoins spent much of Tuesday in the green with the SRM, CEL and FTT tokens of embattled ventures Serum, Celsius and FTX jumping by well into the double digits over the past 24 hours. FTT was, nevertheless, recently trading at $1.80, a fraction of its near $36 highs earlier this year.

SRM slumped more than 72% over the weekend after DeFi protocols across the Solanda ecosystem began unplugging from Serum’s onchain exchange for fear that they didn’t know who wielded control – a concern fueled by a Friday hack of FTX. FTX CEO Sam Bankman-Fried was a major supporter of Serum.

The CoinDesk Market Index, a broad-based index designed to measure the market capitalization weighted performance of the digital asset market, was up about 1%.

Equity markets rose slightly, buoyed by supplier price index (PPI) data for October that arrived lower than expected, indicating that U.S. central bank monetary policies were staunching inflation. The tech-heavy Nasdaq was up 1.4%, while the S&P 500, which has a strong tech component, and Dow Jones Industrial Average (DJIA) climbed 0.8% and 0.1%, respectively.

Oanda’s Moya noted warily that a possible BlockFi bankruptcy could present crypto markets with their next big test. The lender denied rumors that a majority of its assets were held at FTX, but acknowledged on Monday that in addition to having deposits on the platform, it had an undrawn line of credit from FTX and obligations that FTX owed it.

“The next domino to fall appears to be BlockFi,” Moya wrote. “Contagion from FTX was widely expected to impact BlockFi despite their recent denial that a majority of their assets are custodied at collapsed crypto exchange FTX.”

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Technical Take

Exchange Outflows May Not Mean What They Used To

By Glenn Williams Jr.

The FTX collapse marks a new starting point in how investors use exchange balances of BTC and ETH. Often, increases in the exchange balances for BTC and ETH implies bearish sentiment, as coins are sent to exchanges to ready them for sale.

But a comparison of current levels to levels prior to November 2022 may give investors a distorted view.

Now, the outflows might be signaling something very different: that users don’t want their coins sitting on the exchange – as a precaution against the risk of another deposit run similar to what just happened at FTX.

BTC Exchange Net Position Change (Glassnode)
BTC Exchange Net Position Change (Glassnode)

Altcoin Roundup

  • FTX Accounts Drainer Swaps Millions in Stolen Crypto, Becomes 35th-Largest Ether Holder: Multiple addresses connected to the accounts drainer on Tuesday transferred more than 21,555 ether (ETH), or over $27 million, to a single address. The tokens were later converted to stablecoin DAI on the swapping service CowSwap. The funds were siphoned from FTX's crypto wallets late Friday. Read more here.
  • Analysis: FTX’s TRUMPLOSE Token Isn’t Proof of an FTX-Democrat-Ukraine Conspiracy: TRUMPLOSE was part of FTX’s prediction market, where degens made big bucks betting on — or against — Trump or Biden during the 2020 election. Curiously, it’s still on the company balance sheet. Read more here.
  • Tokens of Alameda-Backed DeFi Projects and Oxygen Locked Up at FTX: Alameda Research led funding rounds into both companies in 2021. Read more here.

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James Rubin

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

Glenn Williams

Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX

Jocelyn Yang

Jocelyn Yang is a markets reporter at CoinDesk. She is a recent graduate of Emerson College's journalism program.