First Mover Americas: Bitcoin Eyes Fastest US CPI in 40 Years, Monero Shines

The latest moves in crypto markets in context for April 12, 2022.Read MoreFeedzy

Good morning, and welcome to First Mover, our daily newsletter putting the latest moves in crypto markets in context. Sign up here to get it in your inbox each weekday morning.

Here’s what’s happening this morning:

Market Moves: Bitcoin edges up to $40,600 after U.S. CPI rose a new 40-year high in March. Monero shines as investors have a relook at tokens offering anonymity.

Featured Story: Ichi tokens plunge 90% after bad debt fiasco.

And check out the CoinDesk TV show “First Mover,” hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9 a.m. U.S. Eastern time.

Chris Giancarlo, senior counsel, Willkie Farr & Gallagher

Sasha Ivanov, founder and lead developer, Waves

Benoit Bosc, global head of product, GSR Markets

By Omkar Godbole

Editor’s note: This newsletter was produced prior to the CPI data, which showed inflation rising a faster-than-expected 1.2% in March to an annual pace of 8.5%. The core rate, however, rose a less-than-expected 0.3% in March to an annual pace of 6.5%.

The crypto market was a sea of red early Tuesday as investors braced for a critical U.S. inflation report, which is expected to show the cost of living in the world’s largest economy rose 8.3% year-on-year in March following February’s 7.9% reading.

The core inflation, which strips out the volatile food and energy component, is expected to have risen 6.6% year-on-year versus 6.4% in February. The data is scheduled for release at 12:30 UTC.

On Monday, White House press secretary Jen Psaki told reporters that the impending inflation report could show extraordinarily elevated price pressures, thanks to disruptions in energy and food markets caused by Russia’s war on Ukraine.

Better-than-expected data could bring additional selling pressure to risk assets, including cryptocurrencies.

“Due to the Russia/Ukraine war, core inflation reading is key to watch out for, as this strips out gas and food, giving the Federal Reserve the green light to continue to hammer the market with aggressive policy,” Marcus Sotiriou, analyst at the U.K. based digital asset broker GlobalBlock, said in an email.

The headline figure also matters, as increased expenditure due to rising food and energy costs can keep traditional investors from allocating money to risky assets.

“With soaring inflation, retail investors do not have enough money to invest significant amounts in what they deem as ‘risky’ assets like cryptocurrencies,” Sotiriou said.

Crypto funds have registered outflows ahead of the CPI release, perhaps fearing a strong hawkish reaction to a hotter-than-expected inflation data.

Bitcoin held by funds. (Source: ByteTree)

Data tracked by ByteTree shows the number of coins held by the U.S. and Canadian closed-ended funds and Canadian and European exchange-traded funds has dropped by over 5,776 BTC (worth $243 million) to 855,980 BTC.

There is still hope for the bulls from a technical analysis standpoint, as the total market capitalization remains above the Ichimoku cloud support.

Bitcoin’s daily chart with relative strength index. (TradingView)

Data tracked by ByteTree shows the number of coins held by the U.S. and Canadian closed-ended funds and Canadian and European exchange-traded funds has dropped by over 5,776 BTC (worth $243 million) to 855,980 BTC.

There is still hope for the bulls from a technical analysis standpoint, as the total market capitalization remains above the Ichimoku cloud support.

Daily chart for total crypto market capitalisation. (Source: TradingView)

Acceptance under the cloud would expose yearly lows near $1.5 trillion.

Monero Shines

The privacy-focused Monero or XMR remained on bid, despite macro-induced weakness in the broader market.

The biggest privacy coin by market value traded at $240 at press time, representing a 10% gain on the day, per CoinDesk data. The cryptocurrency was one of the top 10 best performing cryptocurrencies of the past 30 days.

Investors seem to be having a relook at coins offering anonymity in the wake of heightened geopolitical uncertainty worldwide, according to Lux Thiagarajah, head of trading at BCB Group, a business-to-business provider of banking rails to crypto companies.

“Monero’s appeal lies in the fact that it is a privacy coin. Since Russia invaded Ukraine and the West sanctions imposed on Kremlin, privacy coins such as Monero and Zcash have benefitted,” Thiagarajah said in a Twitter chat.

“Greater focus was also placed on these privacy coins ever since President Joe Biden’s executive order regarding cryptocurrencies. With greater scrutiny of cryptocurrencies by governments and the increased rhetoric around CBDCs (central bank digital currency),” Thiagarajah added, saying that dip demand is likely to be strong if the market and political turmoil continues.

By Omkar Godbole

Ichi’s ICHI governance tokens have plunged some 90% in the past 24 hours after a series of cascading liquidations in its pool on yield-generating platform Rari, data show.

“The Ichi Fuse Pool (#136) is currently experiencing bad debt due to cascading liquidations,” Rari said in a tweet late Monday. “This is a permissionless pool that is owned and operated by Ichi Foundation.”

The slump occurred as Rari’s Fuse protocol automatically sold holdings in Pool 136 to support the pool’s value. However, low liquidity for the token on decentralized exchanges (DEX) meant the price suddenly plunged, and the pool was drained. At the time of writing, the liquidity sits at $0 as the entire pool was wiped out as crypto prices declined yesterday.

Today’s newsletter was edited by Omkar Godbole and produced by Bradley Keoun and Stephen Alpher.

DISCLOSURE

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