Cryptos Ignore Latest US Productivity and Employment Data; Bitcoin hovers at $22.9,000

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Hello. Here is what happens:

Price: Cooled GDP. Unemployment insurance claims have plummeted, underscoring the current tight job market and a still-growing economy. But bitcoin and other cryptos were unimpressed with the latest data.

Insights: Litecoin has largely operated out of the spotlight, although its price has held up better than other cryptocurrencies.

Prices

CoinDesk Market Index (CMI)

1,078.95

14.7 1.3%

Bitcoin (BTC)

$22,892

322.5 1.4%

Ethereum (ETH)

$1,582

41.5 2.6%

S&P 500 daily close

4,060.43

+44.2 1.1%

Gold

$1,931

10.1 0.5%

10-year Treasury yield

3.49%

0.0

BTC/ETH Price by CoinDesk Indices; gold is the COMEX spot price. Prices from around 4 p.m. ET

Bitcoin remains unimpressed with the latest GDP and employment data

By James Rubin

Bitcoin was unimpressed with the latest US gross domestic product (GDP) data, an unexpected small jump that suggested the economy was cooling and jobless claims that indicated it was not.

The largest cryptocurrency by market capitalization was recently trading a bit below its latest support line of $23,000, down 1.4% in the last 24 hours. Still, Bitcoin’s more than 35% rise this year remains a good story, even as analysts remain wary of its short-term prospects, as well as those of other cryptos still reeling from the ill effects of the industry of 2022.

“A slight increase in volume coupled with higher prices is usually a bullish sign,” CoinDesk Crypto Markets analyst Glenn Williams wrote in his weekday column. “However, flat prices indicate that both bullish and bearish investors are actively expressing their views in the market.”

Ether followed a similar slightly reddish path to trade just below its current support of $1,600. Other major cryptos have sunk deeper with the APT layer-1 token Aptos Network which recently plunged almost 5% to lose some of the ground it gained earlier this week. APT was changing hands comfortably above $17, a far cry from its levels around $3.50 at the start of the year. Ethereum scaling tool Polygon’s MATIC token was the exception to Thursday’s price trend, which recently rose more than 7%. MATIC is up around 45% in 2023 amid peak daily transactions. The Polygon platform has the second highest number of daily active users (DAUs), according to data from Token Terminal.

The story continues

The CoinDesk Market Index (CDI), an index measuring the performance of cryptos, recently declined by around 1%.

Stock markets continued their uneven ascent this year with the tech-heavy Nasdaq and the tech-heavy S&P 500 jumping 1.8% and 1.1%, respectively, even as earnings from the fourth quarter continued to trend negative and a growing number of companies announced layoffs in anticipation of an economic contraction. Since the beginning of the year, Amazon, Microsoft, Salesforce and more recently IBM have announced job cuts.

The 2.5% rise in GDP and the unexpected drop in jobless claims on Thursday had little impact on the current investment environment, which has turned on cautious hope that inflation will continue to decline without the economy falling into a deep recession. This combination would likely allow the US central bank to reduce the magnitude of its next interest rate hike next week.

In an interview on CoinDesk TV’s “First Mover” program, Jason Pagoulatos, Markets Associate at research group Delphi Digital, said he doesn’t think the latest GDP will have a big impact on crypto markets. Pagoulatos said investors were instead watching the Fed’s next rate decision, although more to accompany the comments than whether governors raised interest rates by 25 or 50 basis points.

“The market knows that rate hikes will continue but at a slower pace until they hit whatever their terminal rate is,” he said. “The main question is that people are trying to clarify how long and then what that ultimately means for things that are still showing signs of strength like the job market.”

The biggest winnersThe biggest losersInsights

Litecoin is forging

By Sam Reynolds

Litecoin was forgotten in the carnage of 2022, where sophisticated new Layer 1 protocols saw their price and total value locked (TVL) decimated. Market data shows it has outperformed both bitcoin and ether throughout the year.

Litecoin has been around since 2011, a fork of the Bitcoin blockchain and the first altcoin, but has lain on the sidelines as the market has become infatuated with Ethereum and layer 1s like Solana, Avalanche, Polkadot, and the like. going up right now.

Aside from an episode in fall 2021 involving a bogus press release and Wal-Mart, Litecoin, despite its $6 billion market capitalization, just isn’t getting the same kind of attention as its market-focused contemporaries. DeFi (there is a small Litecoin DeFi community via the BoringDAO) nor of institutional interest. Grayscales Litecoin Trust, for example, has just $136 million in assets under management compared to GBTC’s $14.65 billion, and trades at a 55% discount to GBTC’s 42%.

Despite all this, over the past year, LTC has only fallen by around 17% compared to 34% for ether and 37% for bitcoin.

Litecoin/US Dollar Daily Chart (TradingView)

Data shared by CryptoQuant contributing analyst Mohsen Saleh shows whales and retail investors are bullish on Litecoin.

The supply distribution indicates that assets in portfolios holding less than 1,000 and less than 10,000 LTC decreased from August 2020 to May 2022. However, after May 2022, this cohort began to increase their holdings and collective bag has increased by 10% since then.

Meanwhile, the cohort of wallets that hold less than 100,000 Litecoins each now collectively hold over 39 million LTC, showing that the whales are also bolstering their supply.

We have seen an increase in trading volume on Litecoin pairs over the past year, indicating that merchants may value faster P2P transactions in a bear market, said Lennex Lai, Managing Director of Financial Markets at ‘OKX, to CoinDesk.

Lai pointed out that shorter transaction and processing times, compared to bitcoin, make it a diversifying game for many traders.

There is also the half story. Like Bitcoin, from which the Litecoin protocol was derived, the rewards offered to miners are expected to drop from 12.5 LTC to 6.5 LTC during the month of August 2023. In turn, this reduces the supply of litecoin available to as the extraction process becomes less efficient. Previous halvings in August 2015 and August 2019 also pushed an uptrend, as CoinDesk previously reported.

It could be argued that the cryptocurrency price trajectory displays a stock-flow pattern, similar to previous halvings [where] a price rally takes place in the months leading up to the halving event, Andrey Stoychev, project manager for the Nexos Institutional Prime Brokerage team told CoinDesk.

Stoychev adds that the existence of Litecoins in the market for over ten years means a lot to traders, who continue to HODL through good times and bad.

In crypto, sometimes it’s slow and steady that wins the race. While it may not be exciting, the endurance of SLDs as a store of value is the narrative the market seems to be heeding.

Litecoin is trading at around $87.50, down around 3.5% in the last 24 hours.

RatesImportant events.

9:30 p.m. HKT/SGT (1:30 p.m. UTC) U.S. Basic Personal Consumption Expenditure – Price Index (Monthly/December)

9:30 p.m. HKT/SGT (1:30 p.m. UTC) United States Personal Income (MoM/Dec)

23:00 HKT/SGT (15:00 UTC) Michigan Consumer Confidence Index (January)

CoinDesk TV

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

Securities

Coinbases $3.6M Dutch Fine Shows Crypto Will Hit Road Bumps as It Goes Mainstream: As crypto enters the regulatory fold, there will be disputes over rules, procedures and jurisdiction and the relatively compliant could end up bearing the brunt from the wrath of regulators.

Sam Bankman-Frieds’ mother and brother not cooperating with Financial Probe, say FTX lawyers: Seeking to locate allegedly embezzled funds, lawyers for bankrupt crypto exchange got answers from founder’s father.

Moodys is developing a rating system for Stablecoins: Bloomberg: This move comes as the quality of Stablecoins reserves continues to come under scrutiny.

Polygon Q4 Transaction Volatility Fueled by FTX Collapse, ZK Rollup Tests, Nansen Says: An increase in daily addresses was partly due to the launch of Polygons zero-knowledge public EVM testnet. There were also new partnership deals with Starbucks and Instagram.

Hollywood in Web3, StoryCo raises $6 million to decentralize storytelling: the platform has just released its first universe of stories, a token-based experience that encourages community members to develop its narrative while decentralizing intellectual property .

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