First Mover Americas: Bitcoin Slips Below $30K as Inflation Hits New Four-Decade High

The latest moves in crypto markets in context for June and 10, 2022.Read MoreFeedzy

Good morning, and welcome to First Mover. I’m Bradley Keoun, here to take you through the latest in crypto markets, news and insights. (Lyllah Ledesma is off.)

Price point: Bitcoin fell below $30,000 after May inflation unexpectedly rose to 8.6%, Helene Braun reports.

Market Moves: Some crypto traders are still getting wiped out – “rekt” as it were – from margin calls on Terra-related tokens, including luna classic (LUNC) as well as the newly issued LUNA replacement tokens, Shaurya Malwa reports.

By Helene Braun

The consumer price index (CPI), the most widely tracked benchmark for inflation, rose 8.6% on a year-over-year basis in May, topping expectations that it would decline to 8.2% from April’s 8.3%. The core CPI – which strips out food and energy costs – rose 6% year-over-year in May, dipping from April’s 6.2%, but more than expectations for 5.9%.

On a monthly basis, the CPI rose 1% in May, ahead of expectations for a gain of 0.7%, and more than tripling from April’s 0.3% advance. The core rate rose 0.6% in May, flat from April, but higher than expectations for 0.5%.

The unexpected fresh four-decade high of 8.6% in headline inflation is problematic for monetary policymakers who are in the middle of a rate hike cycle, but may have been eyeing a pause at some point later this year. Now the question may be whether the Fed needs to raise rates by 75 basis points per meeting, rather than the planned 50 basis points.

Bitcoin (BTC) – which, along with nearly all assets – has taken a major hit as western central banks have begun tightening monetary policy over the past few months, has dipped to $29,500 from $30,000 in the minutes after the report. It remains off by about 65% from its all-time high hit in the fourth quarter of 2021.

Terra’s Luna, Luna Classic Tokens See Volatile Trading Amid New Developments – by Shaurya Malwa

Tokens related to the Terra ecosystem saw volatile trading in the past 24 hours amid legal developments against issuing company Terraform Labs, data shows.

Prices of Luna (LUNA) gained as much as 30% – from $2.65 on Thursday to $3.44 on Friday morning – then fell steeply even as the broader crypto market remained flat. Luna Classic (LUNC) gained as much as 34% before sliding this morning, data from CoinGecko shows.

Such volatility arose amid reports of the U.S. Securities and Exchange Commission (SEC) investigating whether Terraform Labs violated U.S. laws regarding how it marketed its ecosystem tokens.

Futures tracking the two tokens saw nearly $18 million in liquidations while losses on futures of other major cryptos, apart from bitcoin and ether, remained under the $3 million mark.

The LUNA was issued to holders in late May following the depeg of algorithmic stablecoin terraUSD (UST) in early May – a move that saw the value of old Luna (now rebranded as LUNC) to fall as much as 99.7%. Value locked on decentralized finance (DeFi) apps in the Terra ecosystem fell by $28 billion in addition, as reported.

The liquidations marked the highest losses for traders of the new LUNA tokens so far, data shows, with nearly $5 million in losses. However, LUNC futures saw higher losses at over $12 million, suggesting retail traders are continuing to prefer LUNC trading over LUNA.

Today’s newsletter was edited by Bradley Keoun and produced by Parikshit Mishra and Stephen Alpher.


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