CEO of Crypto Trading Firm Amber Argues Bitcoin Can Still Be a Hedge Against Inflation; Cryptos Surprising Rebound

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Hello. Here is what happens:

Prices: Bitcoin and other major cryptos held the same range they occupied before the latest inflation figures.

Knowledge: The CEO of crypto trading firm Amber said there is no better asset for holding value than bitcoin.

Check out the latest episodes of CoinDesk TV for in-depth interviews with industry leaders in crypto and analytics. And sign up for First Moverour daily newsletter providing context for the latest developments in the crypto markets.

Prices

CoinDesk Market Index (CMI): 949.89 +1.2%

bitcoin (BTC): $19,663 +2.9%

Ether (ETH): $1,322 +2.2%

S&P 500 daily close: 3,669.91 +2.6%

Gold: $1,666 per troy ounce −0.2%

Daily close of the 10-year Treasury yield: 3.95% +0.05

Bitcoin, Ether, and Gold prices are taken at around 4 p.m. PT. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information on CoinDesk indices is available at coindesk.com/clues.

Bitcoin’s Counterintuitive Rebound

By James Rubin

So much for the conventional wisdom.

The highly anticipated Consumer Price Index (CPI) came in hotter than expected, the type of reading that typically sends riskier assets tumbling.

Instead, bitcoin did the opposite on Thursday, recovering from an early stumble back to its now familiar perch above $19,000. The largest cryptocurrency by market cap, which recently rose more than 2% and trades above $19,600, occupied a narrow band between $19,000 and $21,000 for much of the month. last, paralyzed by worries about untamed inflation and the growing prospect of a harsh recession.

“What we saw today was the culmination of a month-long buildup of protection buys and an accumulation of implied and realized volatility,” wrote Jon Campagna, Head of Trading and Markets at capital to crypto investment fund CoinFund, to CoinDesk in an email.

Campagna noted steep declines in one-day trading volumes for bitcoin and ether from the previous night after the CPI report, and “similar dynamics” in equity markets. “The ViX (CBOE Volatility Index) is actually down 4.5%!” he wrote. “The CPI figure was hot, but it was an expected level of hot. This caused a relief rally as sell protection was sold and the pounds adjusted to slightly increase risk.”

CPI of 8.2%, up 0.1% from last month, and core inflation of 6.6%, which does not include volatile food and energy prices , offered the latest reminder of inflation stubbornness. Both readings represented four-decade highs.

Ether and other major altcoins followed bitcoin’s Thursday pattern, plunging sharply before quickly recovering lost ground. The second-largest crypto by market value recently changed hands below $1,300, roughly flat as of Wednesday at the same time. GALA and DOT were among the day’s big gainers, recently rising more than 3% and 2%, respectively. ADA fell slightly. The CoinDesk Market Index (CMI)a broad market index that measures the performance of a basket of cryptocurrencies, recently rose 0.52%.

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Crypto prices agreed with stock markets, which also fell early before bouncing back with a vengeance with the tech-focused Nasdaq, S&P 500 and Dow Jones Industrial Average all climbing more than 2 % to break six-day losing streaks, as short-term sellers may have seemed to take advantage of recent dips. The underlying conditions that have been worrying the markets, however, remain in full force, with the US central bank now even more likely than before the CPI to hold the course for another 75 basis point rate hike – or maybe to be more. Mortgage rates in the once torrid housing market are now at a two-decade high, nearly 7%.

Meanwhile, at an Institute for International Finance (IIF) event on Wednesday, Jamie Dimon again called crypto tokens “decentralized Ponzis” even as he praised certain aspects of blockchain technology. The JPMorgan CEO has been among crypto’s most prominent critics, intermittently voicing security concerns even as his bank has been fined billions of dollars for its own violations of laws.

In written comments to CoinDesk, Mark Connors, chief researcher at Canadian digital asset firm 3iQ, said today’s activity did not change the recent economic and investment backdrop. “Lots of cross-currents,” Connors wrote. “Nothing resolved except that inflation is more persistent than expected.”

Connors added optimistically that bitcoin had been less volatile than the Nasdaq on Thursday. “That’s a material difference, and we think it will persist as stocks fall.”

He added: “The recent outperformance of BTC and ETH in the third quarter and today’s lower volatility profile is NOT an accident. half, crypto regulation is accelerating – critical for institutional adoption and equity risk is massively underestimated.”

The biggest winners

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Knowledge

CEO of Crypto Trading Firm Amber Says Bitcoin Can Still Be an Inflation Hedge

By Shaurya Malwa

Crypto markets largely mirrored the downward trend in major stock indices, including the steep price corrections of the previous month. .

Bitcoin and Ether, the two largest cryptocurrencies by market cap, have fallen over 70% from all-time highs in 2021. Solana has fallen over 85%. The sharp declines were antithetical to bitcoin and the envisioned role of other cryptocurrencies as a hedge – similar to gold – against the real-world economy and popular financial instruments like stocks or bonds.

Crypto devotees have recently began to question the hedging role of bitcoin as being more speculative than real. But some traders, including Michael Wu, the co-founder of crypto trading firm Amber, countered that market dynamics explained the recent price drop instead of buyer sentiment.

“It’s a bit early to say that crypto has failed as an ‘investment hedge,’ Wu recently told CoinDesk. “Short-term correlations tell more about overall liquidity conditions, as we are on a cycle of rising rates and on the dynamics of supply and demand, as most crypto investors are also tech investors and have had to shrink their portfolio across the board, rather than fundamental drivers.”

Wu added, “Bitcoin is still a better form of storing value than anything that has come before, and Ethereum, and the decentralized digital economy built on it, offers tremendous value as an infrastructure investment. technology,” Wu said, emphasizing the “need.” be more patient” to see the value propositions of alternative currencies come to fruition over the next few years, if not decades.

Wu and similar types of investors take a long-term approach to cryptocurrency investments that actively avoid looking for short-term moves and instead embrace a structural shift from traditional finance to the crypto ecosystem.

“If we zoom out beyond the short-term trading horizon that cryptocurrencies are all too used to focusing on and look at long-term structural trends, we will see that fundamental investment values ​​in crypto as that asset class have continually become stronger and stronger over time,” Wu said.

Important events.

Devcon Bogotá 2022

11:30 a.m. HKT/SGT (3:30 a.m. UTC) Export and import price indices (September/year)

CoinDesk TV

In case you missed it, here’s the most recent episode of “First Mover” on CoinDesk TV:

Bitcoin Falls After Hotter Than Expected Inflation Report; OCC Chief Hsu on Banks’ Crypto Activities

September’s Consumer Price Index (CPI) report showed inflation was higher than expected despite interest rate hikes. Crypto markets were down across the board. Bob Iaccino of Path Trading Partners joined “First Mover” to discuss what happens next. To discuss the future of crypto regulation, Acting Office of the Comptroller of the Currency (OCC) Chief Michael Hsu and former SEC Branch Chief Valerie Dahiya of Perkins Coie LLP, joined First Mover.

Securities

Ether goes deflationary for the first time since the merger: Coinbase: The number of tokens dropped by 4,000 over the past week as more ether was burned to verify transactions than was created, according to the report.

Stablecoin Tether issuer reduces commercial paper holdings to zero: The company gradually replaced its commercial paper holdings with US Treasury bills.

Police complaints in this Indian district go on the Polygon blockchain: “This is very close to my heart,” Polygon co-founder Sandeep Nailwal tweeted, citing corruption in local police departments that can lead to manipulation of public complaints.

Bitcoin sinks after US CPI report shows higher than expected inflation: The “core” consumer price index, seen as a more stable gauge of inflation, rose 6.6% from a year earlier – a four-decade high.

CBDC transactions in China hit $14 billion as adoption slows, reports the South China Morning Post: The volume of e-CNY transactions increased by only 14% in 2022 compared to the end of last year, compared to the 154% growth recorded in the last six months of 2021.

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