Bitcoin as digital gold and inflation hedging. Really? BTC is under water, while the metal you can hold is breathing air; Cryptos Rebound Sunday

Do not miss CoinDesk’s Consensus 2022, this year’s crypto and blockchain festival experience in Austin, TX on 9-12. June.

Good morning. Here’s what’s going on:

Prices: Bitcoin recovers $ 20,000; others cryptorally.

Insight: Old-fashioned gold outperforms its digital version.

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Prices

Bitcoin (BTC): 20,510 USD +8%

Eat (ETH): USD 1,125 +13.2%

Biggest winners

Biggest losers

Markets

S&P 500: 3.674 +0.2%

DJIA: 29,888 -0.1%

Nasdaq: 10,798 + 1.4%

Gold: $ 1,840 -0.5%

Bitcoin recovers $ 20K; Andre Cryptos Rebound

A Sunday rally sent bitcoin back above the $ 20,000 threshold it has occupied for most of the past month, but analysts remained unconvinced that the rise will have endurance.

Bitcoin was recently traded at around $ 20,500, an increase of over 8% over the previous 24 hours. At one point the day before, the largest cryptocurrency measured by market value had fallen below $ 17,800, the lowest level since mid-December 2017, when Bitcoin was close to the top of a bull run. That dive also fell below its peak in the up-cycle, disproving a theory that bitcoin would not break an earlier-cycle high-water mark.

Ether, the second-largest crypto by market value, followed a similar price pattern and fell to a nearly five-year low below $ 1,000 before rising late in the weekend. It was recently changing hands to around $ 1,120, an increase of more than 13% from the previous day. Other major altcoins were well in the green with LTC and AXS up more than 17% at one point.

“We had marked $ 19K – $ 20K and $ 16K – $ 17K as areas of interest, and Bitcoin jumped from the latter,” Joe DiPasquale, CEO of crypto fund manager BitBull, wrote to CoinDesk. “But unless it successfully maintains $ 20,000 with high volumes and bids, we would not expect the rally to continue.”

The technology-heavy Nasdaq closed an otherwise terrible week for equities with a modest rise of 1.4% on Friday, while the S&P 500 ticked up a fraction of a percentage point. S&P, which includes a significant technological component, fell 5.8% for the week and entered bear market territory, meaning it has fallen at least 20% from its previous high. The Dow Jones Industrial Average fell slightly.

Investors remain concerned about high inflation, which reached a 40-year high in May, continued economic downturn from Russia’s invasion of Ukraine and the growing likelihood of a global recession. Last Wednesday, the US Federal Reserve raised interest rates with the highest rise in more than a quarter of a century – three quarters of a percentage point – the latest step to curb rising prices. Other central banks have also recently raised interest rates on the back of ongoing increases in energy prices.

Meanwhile, the crypto markets have also had to digest a series of debacles stretching to early May, when TerraUSD stablecoin (UST) collapsed. Last week, cryptocurrency lending platform Celsius announced it was halting payouts and cryptocurrency hedge fund Three Arrows Capital is facing possible insolvency after incurring at least $ 400 million in liquidations, according to a report. Coinbase and a number of other major digital asset exchanges have also announced steep job cuts. The Fear and Greed Index has been lingering in extreme fear territory for weeks and is now at 6, close to its lowest ever on a scale of zero to 100.

BitBull’s DiPasquale expects volatility in cryptocurrencies over the next few days due to expiration of options, but he added that “the macro trend is likely to remain bearish until we see the Federal Reserve change or at least relax its stance at the July FOMC meeting.”

Insight

Analog gold beats its digital version

Bitcoin is called the ultimate store of value by its fans; a digital version of gold that retains all the best features of it as an inflation hedge, while being more efficient and fluid thanks to the blockchain technology for which the bitcoin protocol was groundbreaking.

But as crypto faces a harsh winter, perhaps one of the worst ever with major crypto institutions on the verge of failure, belief in this paradigm is being tested.

In fact, compared to gold, bitcoin has fallen more than 55% year-to-date. Gold, on the other hand, has risen 2.45 per cent.

(TradingView)

(TradingView)

And as bitcoin and ether ended the week in Asia with an attempt at a break below $ 20,000 and $ 1,000, respectively, data shows the worst may be on the way yet.

On-chain data, spotted by CryptoQuant, shows that lots of bitcoin is on the way. CryptoQuants Ki Young Ju believes that it is either crypto-hedge funds that fill collateral for long positions, or market makers that fill up liquidity to execute sales orders for their clients.

“For what it’s worth, they’re bearish in the short term in both ways,” he tweeted.

Keep in mind that just over a week ago, bitcoin was at $ 30,000.

Important events

USA juniting holiday

The 4th annual NFT Industry Event (NFT.NYC)

9:30 HKT / SGT (1:30 am UTC): People’s Bank of China interest rate decision

CoinDesk TV

If you missed it, here’s the latest episode of The Hash on CoinDesk TV:

Trons TRX jumps, while DAO spends $ 220 million to buy tokens, investors pull 1.6 billion. dollars from Tethers Stablecoin

“The Hash” hosts discussed Tether’s new wave of redemptions as fears of market contagion spread, Tron DAO invested $ 220 million in token purchases and more.

Headlines

Luna only makes Bermuda love Stablecoins more: Digital assets are the future, said Bermuda’s Prime Minister David Burt during the Consensus 2022 conference. He is not worried that his country will be shut out of jurisdictions like the EU.

Terraform Labs, founder, VC firms sued over allegations that investors were misled: The plaintiff claims that the so-called “Terra Tokens” resembled securities, regardless of investor perception.

Bitcoin dives below $ 20K for the first time since December 2020; Ether drops below $ 1,000: The continued plunge into traditional financial markets and panic over crypto-lending platforms sent Bitcoin into its teens for the first time in more than 18 months.

Longer readings

Hard times in crypto lead to price and macro risk: Just the first in a series of risks we think of in these crypto-down days.

Today’s crypto explanation: How to buy ether

Other voices: Cryptomillionaire says the Fed is driving the current downturn

Said and heard

“Now that the failures of two systemically risky companies – the Celsius and Terra Luna project – are raging in the crypto markets, it is my hope that people in this industry can finally understand the value of asking questions and finding fault. projects and holding people accountable for mistakes in them is how the industry will improve and grow. ” (CoinDesk Chief Content Officer Michael Casey) … “Despite our efforts, we have not been able to get the whale to reduce their risk or even get in touch with them. With the way things are developing with the whale failure to respond, clear measures must be taken to reduce the risk. ” (Solana DeFi platform in a blog post)

UPDATE (June 19, 2022, 0:35 UTC): Adds Fear & Greed Index information.

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