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First Mover: Bitcoin Recouples With Wall Street as Stocks Tumble, Fear Trade Returns

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In a redux of trading from the early days of the coronavirus crisis in March, bitcoin tumbled Thursday in tandem with a sell-off on Wall Street – rekindling an ongoing debate over the cryptocurrency’s use as a store of value.

Prices for bitcoin fell 6.37% to about $9,100, as the Standard & Poor’s 500 Index of large U.S. stocks lost 5.7%.

You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can subscribe here.

The slide in stocks came a day after the Federal Reserve provided an unexpectedly dour assessment of the outlook for the U.S. economy, and investors speculated a possible uptick in new cases might slow the pace of the recovery. Some investors may have also sold bitcoin, still seen as a risky asset despite its 30% gain for the year to date.

“I think the general negative sentiment of traditional markets affects bitcoin,” Sasha Goldberg, senior trader for Efficient Frontier Markets, a digital asset quant fund, told CoinDesk’s Daniel Cawrey.

Thursday’s plunge in bitcoin prices was nowhere near the 39% wipeout on March 12, when it became clear to investors across all markets just how devastating of a toll the coronavirus was likely to take on the economy.

fm-june-12-bitcoin-price-chart

Source: TradingView

The day’s session kindled chatter anew among cryptocurrency analysts over whether bitcoin is mostly uncorrelated with traditional assets, or whether it should trade as an inflation hedge like gold, or in sync with riskier assets like stocks. 

“The institutionalization of crypto (i.e. same firms that trade stocks and other assets, trading crypto), will lead to higher correlation, especially during extreme risk on/off scenarios such as margin calls,” said Denis Vinokourov, head of research at Bequant, a London-based prime brokerage to cryptocurrency investment firms.  

Thursday’s price decline came just a day after the Fed indicated that joblessness would remain elevated for at least three years. That means Fed officials expect to keep interest rates close to zero through 2022, while pumping at least $120 billion a month of freshly created money  into the financial system for the foreseeable future. If bitcoin is an inflation hedge, then loose monetary policy should theoretically be good for the price. 

Larry Kudlow, one of President Donald Trump’s top economic advisers, told Fox Business Network in an interview Thursday that the Federal Reserve’s balance sheet’s “gonna rise by about $10 trillion by year-end.” Just in 2020 alone, the Fed’s total assets have climbed by about $3 trillion to $7.2 trillion.   

“You know, I don’t know why the market has sold off,” Kudlow said Thursday.  

fm-june-12-chart-2-fed-bal-sheet

Federal Reserve total assetsSource: Federal Reserve Bank of St. Louis

Earlier in the day, Stack Funds, a provider of cryptocurrency trackers and index funds, had written in a weekly report that “there was a higher probability for bitcoin to swing upside in the coming week.” It went so far as to predict that bitcoin might be on the cusp of a “potential move upside to $40,000,” or more than quadruple the current price level. 

Instead bitcoin took a nosedive as the mood darkened on Wall Street. 

“Bitcoin, along with the entire emerging digital asset class, are very much considered risky assets,” Mati Greenspan, founder of the research firm Quantum Economics, wrote Thursday in an email to subscribers.

Bitcoin is trading well below its price average for the past 50 and 100 days, typically a bearish signal.

As reported by Cawrey, the U.S. Dollar Index rose 0.4% off its three-month lows Thursday, potentially indicating that investors were looking to classic safe-haven assets, which include cash as well as gold. Prices for the yellow metal were down Thursday, but less than 1%. 

fm-june-12-chart-3-btc-correlations

Source: CoinDesk Research

Since March, bitcoin’s price has shown a weak but consistent correlation with both gold and stock prices. According to Greenspan, that might be a sign of bitcoin’s increasing adoption by investors.  

“The fact that bitcoin had any reaction at all to the Fed yesterday is a clear sign that either a) institutional money is playing a much larger role in the market these days, or b) retail traders are getting more savvy and reacting more to their surroundings,” Greenspan wrote. “Either way, the market is growing up fast.”

Tweet of the day

fm-june-12-tod

Bitcoin watch

BTC: Price: $9,444 (BPI) | 24-Hr High: $9,810 | 24-Hr Low: $9,108

Trend: Bitcoin is back up near $9,450 at press time, having put in a low of $9,112 during the U.S. trading hours on Thursday. 

The cryptocurrency fell by over 6% as stock markets across the globe cratered on renewed growth concerns and fears that a second wave of the coronavirus pandemic would wreak further economic havoc. 

The risk sentiment, however, looks to have stabilized somewhat over the last few hours with futures tied to the S&P 500 gaining over 1%. European equities, too, are reporting modest gains. Bitcoin could rebound further if the stock market recovery gathers pace.

However, the odds look stacked in the other direction.

The U.S. bond market has priced out the prospects of a V-shaped economic recovery. Meanwhile, a second wave of coronavirus seems to have hit the U.S. states of Texas, Florida and California, even as some emerging market economies are still experiencing their first waves. 

There are also concerns that the stock market has risen too far from the lows seen in March on the back of unprecedented liquidity injections by central banks across the globe, and has lost touch with the reality that the economy may take years to recover. As a result, equities are likely to remain under pressure in the short term and keep bitcoin on the defensive. 

The cryptocurrency’s technical charts are also painting a bearish picture. Thursday’s decline validated a bearish divergence of the three-day chart’s relative strength index and marked a downside break of the eight-day restricted trading range between $9,350 and $10,000. 

The range breakdown, coupled with sub-zero reading on the MACD, indicate scope for a drop to support at $8,630 (May 27 low). On the higher side, $10,000 is still the level to beat for the bulls.

coindesk_newsletters_1200x400_23

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The leader in blockchain news, 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.

Source: https://www.coindesk.com/first-mover-bitcoin-recouples-with-wall-street-as-stocks-tumble-fear-trade-returns

Blockchain

CLS Group Posts Uptick in March FX Volumes as Markets Remain Active

FX swap demand last month even crossed the record achieved by the company in March 2020.

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CLS Group, a major foreign exchange settlement provider, reported positive growth in trading activities in March across all offered forex instruments. The company posted an average daily traded volume of $1.977 trillion for the month, which is 1.8 percent higher than February’s numbers.

The increase in the demand can be seen across forward, swap, and spot FX markets, where the company is operating. The demand for FX swaps leaped the highest last month with around a 3 percent jump to $1.377 trillion from February’s $1.353 trillion. It was even higher than what the company recorded in March 2020 when the entire financial market saw extreme volatility due to the Coronavirus breakout.

Looking Forward to Meeting You at iFX EXPO Dubai May 2021 – Making It Happen!

The forward and spot FX market also jumped higher by 2 percent each to $0.117 trillion and $0.483, respectively. However, the overall monthly figures remained lower than what the FX settlement provider reported a year ago.

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Following the Industry Trend

“In the first quarter of 2021, we witnessed record average daily traded volumes of USD1.95 trillion, demonstrating a consistent increase of FX market activity year-on-year,” said Keith Tippell, CLS’s global head of product. “This was despite a 10% decrease in overall volumes in the month of March 2021 compared to the record highs in March 2020, driven by the extreme market volatility relating to the COVID-19 pandemic.”

Tippell further elaborated that a significant portion of the FX demand was generated by two currency pairs, USD/JPY and USD/HKD, as both recorded a monthly uptick of 15 percent and 38 percent, respectively.

Meanwhile, the company is expanding its industry footprint with more and more partnerships. In the past few months, Capitolis and BGC Group tapped CLS to enhance their FX services.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.financemagnates.com/institutional-forex/execution/cls-group-posts-uptick-in-march-fx-volumes-as-markets-remain-active/

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Blockchain

CLS Group Posts Uptick in March FX Volumes as Markets Remain Active

FX swap demand last month even crossed the record achieved by the company in March 2020.

Avatar

Published

on

CLS Group, a major foreign exchange settlement provider, reported positive growth in trading activities in March across all offered forex instruments. The company posted an average daily traded volume of $1.977 trillion for the month, which is 1.8 percent higher than February’s numbers.

The increase in the demand can be seen across forward, swap, and spot FX markets, where the company is operating. The demand for FX swaps leaped the highest last month with around a 3 percent jump to $1.377 trillion from February’s $1.353 trillion. It was even higher than what the company recorded in March 2020 when the entire financial market saw extreme volatility due to the Coronavirus breakout.

Looking Forward to Meeting You at iFX EXPO Dubai May 2021 – Making It Happen!

The forward and spot FX market also jumped higher by 2 percent each to $0.117 trillion and $0.483, respectively. However, the overall monthly figures remained lower than what the FX settlement provider reported a year ago.

Suggested articles

FBS Broker Updates its Trading Platform for Excellent PerformanceGo to article >>

Following the Industry Trend

“In the first quarter of 2021, we witnessed record average daily traded volumes of USD1.95 trillion, demonstrating a consistent increase of FX market activity year-on-year,” said Keith Tippell, CLS’s global head of product. “This was despite a 10% decrease in overall volumes in the month of March 2021 compared to the record highs in March 2020, driven by the extreme market volatility relating to the COVID-19 pandemic.”

Tippell further elaborated that a significant portion of the FX demand was generated by two currency pairs, USD/JPY and USD/HKD, as both recorded a monthly uptick of 15 percent and 38 percent, respectively.

Meanwhile, the company is expanding its industry footprint with more and more partnerships. In the past few months, Capitolis and BGC Group tapped CLS to enhance their FX services.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.financemagnates.com/institutional-forex/execution/cls-group-posts-uptick-in-march-fx-volumes-as-markets-remain-active/

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Blockchain

Chinese Police Confiscated $3.8 Million in Crypto After Arresting EOS Gambling dApp Team

$3.8 million in bitcoin and EOS seized in China from a team of developers operating a decentralized gambling platform built on the EOS blockchain.

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Chinese police officers have confiscated nearly $4 million in various cryptocurrencies after a raid against several developers that operated a decentralized gambling app built on the EOS blockchain.

$3.8 Million in Crypto Seized

After receiving tips of suspected illegal activity involving the developers of the dApp called Biggame, the Jiangsu police department opened an investigation. Ultimately, this led to the arrest of 15 people.

During the raid, the authorities found and seized 1.3 million units of EOS and BTC. Converted in fiat currencies, this amount equals 26 million yuan or $3.8 million.

According to the report, this is the first criminal case the police solved in connection with illegal online gambling inside China.

The dApp’s structure allowed it to attract players to games such as Dice and Texas Hold’em. The customers placed their bets using EOS smart contracts.


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The Chinese officials reported that in the period between June 2018 and December 2020, the group behind the dApp allegedly gained profits from the operations with crypto assets worth 60 million yuan or about $10 million.

It’s not the first time Chinese police go after fraud related to blockchain-based applications and platforms. As reported last year, the authorities arrested 109 people connected with the cryptocurrency pyramid scheme PlusToken. The well-known Ponzi scheme has defrauded investors of more than $5.7 billion.

”Internet Cleansing Movement”

The biggest economy in Asia – China – appears to be one of the leading countries regarding cryptocurrency mining and distribution but has also had tons of experience with illicit activities coming within its borders.

The arrest in Jiangsu highlights the Chinese law enforcement’s goal to neutralize any illegal online activities – from gambling and telecommunication fraud to money laundering. The mission was referred to as ”Internet cleansing movement.”

Furthermore, the end of last year saw an increasing number of court rulings in this field. According to the officials, nearly 100 individuals have been convicted for laundering money via crypto deals that involved more than $30 million worth of the most widely utilized stablecoin – Tether (USDT).

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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cryptopotato.com/chinese-police-confiscated-3-8-million-in-crypto-after-arresting-eos-gambling-dapp-team/

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$10 Billion in Liquidations as the Crypto Market Cap Evaporated $360B in Hours

Record-setting liquidations worth $10 billion in the past 24 hours as the entire crypto market plummeted by double-digit percentages. 

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The enhanced volatility in the past day caused nearly $10 billion in liquidations in less than a day as bitcoin, and all altcoins fell hard. Naturally, over 90% of the liquidated amount came from long positions. 

  • CryptoPotato reported earlier today the adverse price developments in the cryptocurrency market. Bitcoin fell by more than $9,000 in hours, Ethereum lost $400, and so on. With most digital assets plummeting by double-digits, the cumulative market cap lost $360 billion at one point. 
  • As it generally happens, the community speculated for possible reasons. One theory outlined rumors indicating that the US Treasury Department plans to charge numerous financial institutions for laundering money using cryptocurrencies. 
  • While the reason is still debated, the severe price drops caused pain for traders. Data from Bybt shows a whopping amount of $9.98 billion liquidated in the past 24 hours alone. Somewhat expectedly, over $9 billion were from long positions – meaning 91%.  
  • Most of the liquidations took place on Binance, which is somewhat expected as it’s the leading exchange by volume. Following were Huobi and Bybit.
  • More interestingly, the largest single liquidation order happened on Binance and it had a face value of a whopping $68.73 million.
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You Might Also Like:


Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cryptopotato.com/10-billion-in-liquidations-as-the-crypto-market-cap-evaporated-360b-in-hours/

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