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Cryptocurrencies were mostly down on Wednesday despite bitcoin’s brief 3% jump after the US Federal Reserve maintained an accommodative monetary policy.
But the gains were shortlived as risky assets pulled back as traders focused on Fed officials’ revised forecasts for interest rate hikes by the end of 2023 earlier than expected in March.
Latest prices
Bitcoin (BTC) $ 38,577.3, -2.71% Ether (ETH) $ 2,415.5, -4.05% S&P 500: 4,223.76, -0.54% Gold: $ 1,826.61, – 1, 7% 10-year Treasury yield: 1.554%
The Fed also raised its estimates of upcoming inflation to 3% from the 2.2% projection in March, largely due to transient factors.
The improved economic forecast still supports the argument that the Fed may announce a progress-dependent reduction plan at the end of the summer, with a reduction effective from January, wrote Edward Moya, senior market analyst at Oanda. , in an email to CoinDesk.
Moya expects risky assets, including cryptocurrencies, to come under near-term pressure due to worrying signs of inflation. The price hike could cause the Fed to cut faster than expected.
The prices of the S&P 500, gold, copper and platinum fell as 10-year US Treasury yields exceeded 1.5%.
Regulatory developments
Traders had more to do than the Fed expected for an earlier interest rate hike. Crypto markets continue to come under pressure from regulators, and it’s not just related to China.
Members of the United States House of Representatives have formed a task force to discuss a range of crypto topics, with the aim of working with regulators and experts to dive deep into this poorly understood and poorly regulated industry. , according to US representative Maxine Waters (D-California), chairman of the House Financial Services Committee.
And in South Korea, the exchanges have halted trading in some cryptocurrencies as regulatory pressure increases. The latest move follows an ongoing regulatory crackdown on crypto trading, which included fines imposed on exchange employees caught trading on their own platforms.
Regulatory crackdowns could weigh on crypto prices and keep financial advisers out.
In fact, over 90% of independent financial advisers Opinium polled would not recommend investing in crypto or meme stocks.
For now, traders continue to make long / short bets; on the one hand, balancing regulatory uncertainty, while being sensitive to an accommodating macroeconomic context that has rewarded risky assets in recent years.
High cover costs
In the bitcoin options market, hedging costs remain high, indicating that the fear caused by the May sell-off has not completely dissipated.
The chart below represents the three-month bitcoin option premiums for sell contracts with strikes at 80% of the spot price, based on data provided by Skew. The current hedge level is still higher than the May low, which preceded a price drop of almost 30%.
The chart below represents the 3-month bitcoin option premiums for sell contracts with strikes at 80% of the spot price.
Source: bias
A similar dynamic is seen in the one-week buy bias, which measures the spread between the prices of short-term put and call options. The tilt of put options drifted from a high of nearly 20% in May, but remains elevated from previous months.
The options data suggests traders are not being overly complacent given the absence of a decisive price breakout on a one-month range.
The chart shows one-week put asymmetry, which measures the spread between the prices of short-term put and call options.
Source: bias
Bitcoin hashrate decline
Bitcoin hash, the total computational power used to secure transactions on the blockchain, has fallen to its lowest level since November, possibly reflecting China’s recent crackdown on cryptocurrency mining amid concerns about the energy consumption of networks.
The seven-day average hashrate fell to 129.1 million exahashs per second on Tuesday, a far cry from the all-time high of 180.6 million exahashs per second in mid-May, according to data from Glassnode. This is still up from 105.6 million a year ago.
Bitcoin’s hashrate fell to its lowest level since November.
Source: GlassNode
However, some analysts predict that the Bitcoin hashrate decline will eventually reverse, as some miners leave China for other locations.
When zoomed out, the size and rate of the latest drop is consistent with other previous drops, wrote Zack Voell, director of content at Compass Mining. After the machines move across the map and the hashing power moves to new regions, the steady growth of Bitcoins hash is expected to resume.
Altcoin balance sheet
Banks could one day be key participants in Ethereum 2.0, according to companies such as Blockdaemon and Bison Trails. However, decentralized staking pools still need a head start on Ethereum 2.0 to better compete with their centralized counterparts, a blockchain engineer said. Decentralized exchange based on Ethereum Kyber Network partners with Ethereum’s Layer 2 scaling solution. DeFi) liquidity. Step Finance Trading Dashboard brings together Solanas decentralized exchanges (DEX), including automated market maker Raydium, SerumDex and Orca, to give traders faster access to price information. The Solana Foundation has made a $ 3 million investment in the PARSIQ blockchain data platform.
Relevant news
Other markets
Almost all digital assets on CoinDesk 20 ended up going down on Wednesday.
Notable losers at 9:00 p.m. UTC (4:00 p.m. ET):
chain link (LINK) – 5.18%
funding year (YFI) -5.09%
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