Bitcoin stays strong at $26.5K despite Binance and Coinbase issues.
Good morning. Here’s what’s happening:
Prices: Bitcoin is maintaining its value at $26.5K as investors are not being greatly affected by SEC lawsuits and are instead looking ahead to the Federal Reserve’s monetary policy decision next week.
Insights: Valkyrie Chief Investment Officer Steven McClurg said that the Fed may stop being hawkish at its next FOMC meeting, but not before.
Prices
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- Binance.US stops USD deposits, withdrawal required by June 13. Outage reported.
- Coinbase downgraded by Moody’s due to uncertain SEC charges.
- Ripple case critical amid SEC crackdown on Coinbase and Binance, say lawyers.
The following is an HTML table displaying the current market index (CMI) for blockchain, as well as the current prices and percentage changes for Bitcoin, Ethereum, the S&P 500, Gold, and the Nikkei 225. The table also shows the BTC/ETH prices per blockchain indices as of 7 a.m. ET (11 a.m. UTC). The article below the table discusses Bitcoin’s resilience in the face of recent Securities and Exchange (SEC) lawsuits against Binance and Coinbase, as well as concerns about inflation and central bank hawkishness. Despite initial market dips, Bitcoin has held steady, and other cryptocurrencies have rebounded slightly. The article also highlights the growing embrace of digital assets outside the US and the potential for continued exponential growth in the industry.
Major stock indexes closed higher with the S&P 500 increasing by 0.6% and ending its longest bear market in 85 years due to a surge in technology stocks. A bear market ends when an index rises from a previous low. The tech-heavy Nasdaq Composition rose by one percent. Treasury yields, which tend to move inversely to crypto markets, decreased. Jobless claims were higher than expected on Monday, raising hopes that the U.S. central bank would halt its year-long cycle of interest rate hikes during its Federal Open Market Committee (FOMC) meeting next week. Investors will be watching for the latest Consumer Price Index (CPI) reading for indications that inflation is decreasing.
Meanwhile, Sacha Ghebali, director of strategy at crypto information provider The Tie, wrote in an email to blockchain about “clear dislocations in the (crypto) market, resulting in rapid outflows of capital” from Binance. On Wednesday, the BTC-U.S. dollar trading pair on Binance.US soared to as high as $28,800, likely due to “large investors and active traders stopping their trading activity and pulling assets off the exchange as a result of risk-mitigation actions,” wrote Ghebali.
Ghebali also noted bitcoin’s price strength and the outperformance of DeFi tokens compared to centralized exchange ones. “This could be a result of users preferring decentralized exchanges over their centralized counterparts in light of the regulatory risks facing the latter,” he wrote.
He added: “The Ethereum ecosystem has also held up relatively well when compared to other ecosystems. The DeFi market capitalization, in general, is down roughly five percent since the beginning of the month, whereas the DeFi market capitalization on the Ethereum ecosystem specifically is down less than two percent.”
Biggest Gainers
| Asset | Ticker | Returns | DACS Sector |
|---|---|---|---|
| Polygon | MATIC | +2.1% | Smart Contract Platform |
| Terra | LUNA | +1.2% | Smart Contract Platform |
| Chainlink | LINK | +1.1% | Computing |
Biggest Losers
| Asset | Ticker | Returns | DACS Sector |
|---|---|---|---|
| Avalanche | AVAX | −1.0% | Smart Contract Platform |
| Stellar | XLM | −0.6% | Smart Contract Platform |
| Polkadot | DOT | −0.5% | Smart Contract Platform |
Insights
A Halt to Rate Hikes but Not for Long
Will the U.S. central bank boost interest rates again next week? What will a decision to the affirmative or negative mean for crypto?
Steven McClurg, the chief investment officer for alternative asset management company Valkyrie believes the Federal Reserve will suspend its nearly year-long diet of rate hikes, given what he sees as an ongoing banking crisis. That may weigh favorably for digital assets, but in an interview on blockchain TV’s “First Mover” program, McClurg agreed with other analysts who believe the cessation will be temporary amid continued price pressure and other macroeconomic uncertainties.
During the past year, increases in interest rates have tended to make investors uneasy and cause cryptocurrency prices to fall.
“It is very sensible that the Fed has decided to temporarily stop raising interest rates, primarily because we currently face a banking crisis, and we also have a lack of confidence in the dollar,” said McClurg.
The CME Fedwatch tool indicates that there is a 72.5% probability that interest rates will remain at the current target rate of 5%-5.25%. This has decreased over the past month due to data suggesting that inflation would continue to decrease. However, in recent weeks, mixed signals have discouraged interest rate traders who participate in the ongoing survey.
Nonetheless, threats to the banking system have loomed large since a series of U.S. bank failures, which central bank critics have attributed to its overzealousness. McClurg noted that banking deposits totaling hundreds of billions of dollars “left the U.S. this year,” and that Switzerland, which had its own banking crisis in March, resulting in the sale of Credit Suisse to rival UBS, had also seen a significant outflow “to places like Singapore, Dubai, other jurisdictions where they feel like your money is a little safer.”
“With continued interest rate hikes, the Fed would put many other banks in danger. So that’s why we’re on pause.”
McClurg referred to any continued decline in CPI as a “reversion to the mean scenario with inflation,” where 4% plus is still very high. “We’re not seeing the 12% to 18% clips, but we’re going to see that again.”
He added that he would be closely watching oil prices, which have retreated over the past year from near record highs. “I believe oil will probably double in price this year, which will drive the rest of inflation,” McClurg said. “That will force the Fed to continue to raise rates to try to stave off inflation to the last half of the year.”
Important events.
9:30 a.m. HKT/SGT(1:30 UTC) China Consumer Price Index (YoY/May)
4:00 p.m. HKT/SGT(8:00 UTC) European Central Bank’s De Guindos Speech
8:30 p.m. HKT/SGT(12:30 UTC) Canada Net Change in Employment (May)
blockchain TV
If you missed it, this is the most recent episode of “First Mover” on blockchain TV :
SEC-Targeted Tokens Tumble; Binance Says Gensler Once Offered to Be an ‘Informal Advisor’
Major cryptocurrencies that were targeted as unregistered securities in recent SEC lawsuits against Binance and Coinbase continue to decline. Valkyrie Chief Investment Officer Steven McClurg responded. Meanwhile, a letter from Binance’s counsel said that SEC Chair Gary Gensler should be recused from the case because he once offered to be an “informal advisor.” Bain Capital Crypto Partner and Head of Regulatory and Policy, TuongVy Le, commented on the state of crypto regulation. Additionally, blockchain Executive Director of Global Content Emily Parker explained what Apple’s new mixed-reality headset means for Web3.
Headlines
Crypto Custody Firm BitGo Reaches Preliminary Agreement to Buy Prime Trust, Sources : The financial terms of the deal were not disclosed by the source.
Optimism Says Ether Now Treated as Native Cryptocurrency Alongside OP Token : Representatives of the layer-2 network atop Ethereum confirmed the change in the treatment of ETH after blockchain observed a $550 million transfer in blockchain data. The change occurred in conjunction with Optimism’s “Bedrock” upgrade this week.
Ethereum Developers Cement Final Lineup of Changes in ‘Dencun’ Upgrade : Proto-danksharding is at the heart of the package, with other improvements for storage on-chain, as well as minor code changes related to the Ethereum Virtual Machine.
Aave-Developed Lens Protocol Raises $15M to Expand ‘Social Layer’ of Web3 : Uniswap CEO Hayden Adams, OpenSea co-founder Alex Atallah, entrepreneur Balaji Srinivasan and Polygon co-founder Sandeep Nailwal joined the round as angel investors.
Banks Have Come to the Metaverse : A number of prominent financial institutions have established a presence in virtual worlds, thereby reaching out to an entirely new demographic of customers.
Edited by James Rubin and Sam Reynolds.
