First Mover Americas: ECB (Finally) Exits Negative Rates as Bitcoin Digests Tesla Sales

Good morning, and welcome to First Mover. We’re Bradley Keoun and Shaurya Malwa, here to take you through the latest in crypto markets, news and insights.

(First Mover lead author Lyllah Ledesma is in Paris for the EthCC conference. Her dispatch from the conference on Wednesday is here. Spoiler alert: Ethereum’s Vitalik Buterin was overheard ordering a hot water during one of Europe’s worst heat waves in recent memory.)

This web version of today’s First Mover newsletter was produced by Sage D. Young.

Cryptocurrencies reversed Wednesday’s price gains as traders took profits after days of an uptrend, causing bitcoin to slip below $23,000 and majors taking hits of as much as 10% in the past 24 hours.

Solana’s SOL slid 8.8% to lead losses among majors. Cardano’s ADA fell 8%, dogecoin dropped 7%, while XRP and BNB fell nearly 5%. Ether dipped but continued to trade above the $1,500 level.

A drop in bitcoin prices came as electric carmaker Tesla said in an earnings report on Wednesday that it sold $936 million worth of bitcoin, or 75% of its holdings, in the second quarter. CEO Elon Musk cited “the uncertainty of the COVID lockdowns in China” as a crucial reason for its decision. Musk added the company did not trim its dogecoin holdings.

However, Musk said Tesla is open to increasing its bitcoin holdings again in the future and noted that the second-quarter sale “should not be taken as some verdict on Bitcoin.”

Analysts said retail investors should not take the bitcoin sale as a caution sign. “Having the billionaire’s company sell a majority of its BTC holdings shouldn’t necessarily be taken as a statement or reflection of Elon Musk’s position towards Bitcoin,” said Claudiu Minea, CEO of crowdfunding platform SeedOn in a Telegram chat. “This is likely more of a need for liquidity for the company as their profitability for Q2 has suffered due to the current downward trend for bitcoin’s price.”

“Therefore, the decision to sell might be due to the need for cash on the balance sheet, rather than not seeing bitcoin as a valuable asset anymore,” Minea said.

By Oliver Knight

Wall Street analysts are signing on to a market thesis suggested by the sudden rally in digital-asset markets over the past week: That the worst of this year’s price crash in cryptocurrencies might now be over.

Crypto analysts and traders warn that there might still be another price drop on the way. But the signals are turning more bullish.

Demand among retail investors in the crypto market is improving, and the “intense phase” of deleveraging appears to be over, the big Wall Street bank JPMorgan wrote Thursday in a report.

“The extreme phase of backwardation seen in May and June, the most extreme since 2018, appears to be behind us,” the bank said.

Crypto markets have bounced back in recent weeks as investors anticipate the Ethereum merge that is set to commence on September 19.

Ethereum network activity has increased alongside an uptick in investor sentiment, JPMorgan said.

Read the full story here: JPMorgan Sees Crypto Retail Demand Improving, End of ‘Intense’ Deleveraging Phase