Bitcoin surges on encouraging inflation news

Price action

The latest inflation data on Tuesday suggested that the US central bank was winning its anti-inflation campaign, and cryptocurrency investors welcomed the news.

Bitcoin recently traded above $16,700, up more than 2% in the past 24 hours. The largest cryptocurrency has rallied since Monday, even as the aftermath of cryptocurrency exchange FTX’s liquidity crunch and filing for Chapter 11 bankruptcy protection widens. The Wall Street Journal reported that cryptocurrency lender BlockFi is preparing for a potential bankruptcy filing due to its “significant exposure” to FTX.

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“Bitcoin is showing resilience here, but it’s hard to imagine investors are ready to test the waters until we know more about the full contagion risk associated with FTX,” wrote Edward Moya, senior market analyst for the market maker. exchange Oanda, though he warned that “if more cryptocurrency exchanges or companies halt withdrawals or limit activity, that will likely put the pressure back on cryptocurrencies.”

Ether recently traded around $1,250, down more than 3% from the same time on Monday. Other major altcoins spent much of Tuesday in the green with SRM, CEL and FTT tokens from conflicting ventures Serum, Celsius and FTX jumping into double digits in the last 24 hours. However, the FTT recently traded at $1.80, a fraction of its highs of nearly $36 earlier this year.

SRM plunged more than 72% over the weekend after DeFi protocols in the Solanda ecosystem began to detach from Serum’s onchain exchange out of fears of not knowing who was in control, a concern fueled by a Friday hack by FTP extension. FTX CEO Sam Bankman-Fried has been a major proponent of Serum.

The CoinDesk Market Index, a broad-based index designed to measure the market capitalization-weighted performance of the digital asset market, was up about 1%.

Stock markets rose slightly, supported by supplier price index (PPI) data for October which came in lower than expected, indicating that US central bank monetary policies were holding back inflation. The tech-heavy Nasdaq rose 1.4%, while the S&P 500, which has a strong technology component, and the Dow Jones Industrial Average (DJIA) rose 0.8% and 0.1%, respectively.

Oanda’s Moya cautiously noted that a possible BlockFi failure could present the cryptocurrency markets with their next big test. The lender denied rumors that most of its assets were held at FTX, but acknowledged on Monday that in addition to having deposits on the platform, it had an undrawn line of credit from FTX and obligations FTX owed it.

“The next domino to fall appears to be BlockFi,” Moya wrote. “The contagion from FTX was expected to impact BlockFi, despite their recent denial that most of their assets are held at the collapsing cryptocurrency exchange FTX.”

Latest prices

CoinDesk Market Index (CMI)

854.91

+19.3 2.3%

BTC (BTC)

$16,878

+473.2 2.9%

Ethereum (ETH)

$1,245

+19.4 1.6%

S&P 500 daily close

3,991.73

+34.5 0.9%

Gold

$1,782

+8.3 0.5%

Treasury yield 10 years

3.8%

0.1

BTC/ETH Prices for CoinDesk Indices; gold is the COMEX spot price. Prices starting around 4pm ET

Technical grip

Foreign exchange outflows may not mean what they once did

By Glenn Williams Jr.

The crash of FTX marks a new starting point in how investors use trading balances of BTC and ETH. Often, increases in trade balances for BTC and ETH imply bearish sentiment, as coins are sent to exchanges to prepare them for sale.

But a comparison between current and pre-November 2022 levels could give investors a skewed view.

Now, the outflows could be signaling something very different: that users don’t want their coins to remain on the exchange, as a precaution against the risk of another deposit executed in a similar fashion to what just happened at FTX.

Net position change on the BTC exchange (Glassnode)

Read the full technical version here.

Collection of altcoins

  • FTX Accounts Drainer trades millions in stolen cryptocurrencies, becoming the 35th largest holder of Ether: Multiple addresses linked to account drain on Tuesday transferred more than 21,555 ether (ETH), or more than $27 million, to a single address. The tokens were later converted into DAI stablecoins on the CowSwap exchange. Funds were embezzled from FTX’s crypto wallets late Friday. Read more here.

  • Analysis: FTX’s TRUMPLOSE token is not proof of a FTX-democratic-Ukrainian conspiracy: TRUMPLOSE used to be part of FTX’s prediction market, where degens made big money betting on — or against — Trump or Biden during the 2020 election. Curiously, it’s still on the company’s balance sheet. Read more here.

  • Alameda-backed DeFi project tokens Maps.me and oxygen blocked at FTX: Alameda Research conducted funding rounds at both companies in 2021. Read more here.

Trending posts

  • Listen 🎧: Today’s “CoinDesk Markets Daily” podcast discusses the latest market movements and takes a look at some good news about low cryptocurrency prices.

  • Solana DeFi Sees Nearly $700M in Value Wiped Out by FTX Fallout: FTX founder Sam Bankman-Fried has been a major proponent of the network.

  • Celsius is $12 million in debt from Alameda Research, the newest member of the Bankrupt Crypto Club: The new CEO of the bankrupt crypto lender told the judge that Celsius Mining has around 40,000 mining rigs.

  • Crypto lender BlockFi prepares for possible bankruptcy filing after FTX woes, WSJ reports: The company previously suspended withdrawals following the collapse of cryptocurrency exchange FTX last week.

  • Meaning of FTX Fall Depends on One’s Policy, US Senate Hearing Shows: US political parties draw separate and opposing lessons from the collapse of Sam Bankman-Fried’s crypto empire.

  • The “SBF Bill”: What’s in the Cryptocurrency Legislation Backed by FTX Founder: The specter of the now-disgraced Sam Bankman-Fried hangs in the bill, but Senators Debbie Stabenow and John Boozman plan to go ahead anyway.

  • Cathie Woods’ ARK Buys 315,000 Shares in Grayscale’s Bitcoin Trust: It was the fund’s first purchase of the fund in nearly a year and a half.

  • Big Banks and New York Fed Begin Testing Digital Tokens for “Wholesale” Transactions: Citigroup, HSBC, BNY Mellon, Wells Fargo and Mastercard, are among the financial giants taking part.

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