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First Mover Americas: Bitcoin Regains $42K Following Wednesday's Dip
The latest price moves in crypto markets in context for Feb. 1, 2024.
This article originally appeared in First Mover, CoinDesk’s daily newsletter, putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.
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Bitcoin traded just above $42,000 in the European morning after Fed Chair Jerome Powell cooled hopes of an interest-rate cut in March yesterday. "The message from the Fed last night is that a March cut is not the base case, and they need to gain greater confidence that inflation will remain at these levels before moving," said Nick Chatters, a fixed income investment manager at Aegon Asset Management. "Having said that, confidence is building, and Chair Powell was open in communicating that a cut will come this year. No surprise in any of that." BTC dropped as low as $41,870 on Wednesday night, and while it has ticked slowly upward, it remains some way short of $43,000, where it started the week. The CoinDesk 20 Index, which measures the performance of the top digital assets, is down around 1.1% in the last 24 hours.
ARK Invest said the optimal allocation of crypto in one's portfolio is just under 20% in its annual Big Ideas report. "Over the last seven years, bitcoin has registered an annualized return far surpassing that of major asset classes, with an optimal allocation rising to 19.4% in 2023," the Cathie Wood-helmed firm wrote. "Our analysis suggests that allocating 19.4% to bitcoin in 2023 would have maximized a portfolio’s risk-adjusted returns." The optimum allocation was 0.5% in 2015 and 6.2% in 2022. Bitcoin's low five-year correlation of 0.27 with traditional assets underscores its diversification benefits, and even minimal allocations by institutional investors could notably influence its price, given the vast $250 trillion global investable asset base, ARK added.
Cryptocurrency lender Celsius will distribute $3 billion in crypto to its creditors as it emerges from bankruptcy. The crypto will be distributed via Coinbase and PayPal. As part of the deal, creditors will also get a stake in the newly formed Ionic Digital Inc. mining operation, which is expected to become a publicly traded company subject to regulatory approval. Celsius' bankruptcy process also saw it make a $4.7 billion settlement with U.S. authorities related to allegations of fraud by former CEO Alex Mashinsky. Mashinsky was released on a $40 million bond, and a court ordered his banking and real estate assets frozen. His trial is scheduled for September 2024.
Chart of The Day
- The chart shows the 24-hour change in cumulative volume delta (CVD) in futures and perpetual futures tied to the top 25 cryptocurrencies by market value.
- Except for BTC, TRX, ATOM and XMR, the CVD has been negative for most coins, indicating a net selling pressure.
- On Wednesday, Federal Reserve Chairman Jerome Powell pushed back against bets of a U.S. rate cut as soon as March, sending the dollar index to seven-week highs.
- Source: Velo Data
- Omkar Godbole
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Solana CME Futures Fell Short of BTC and ETH Debuts, but There's a Catch
When adjusted for asset market capitalization SOL's relative futures volume looks better, K33 Research noted.
What to know:
- Solana's SOL futures began trading on the Chicago Mercantile Exchange (CME) on Monday, with a notional daily volume of $12.3 million and $7.8 million in open interest, significantly lower than the debuts of bitcoin (BTC) and ether (ETH) futures.
- Despite the seemingly lackluster debut, when adjusted to market value, SOL's first-day figures are more in line with BTC's and ETH's, according to K33 Research.
- Despite the bearish market conditions, the launch of CME SOL futures offers new ways for institutions to manage their exposure to the token, said Joshua Lim of FalconX.
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