First Mover Americas: Crypto Traders Eye US CPI Report, Monero Shines

Good morning, and welcome to First Mover, our daily newsletter putting the latest moves in crypto markets in context. Sign up here to get it in your inbox each weekday morning.

Here’s what’s happening this morning:

• Market Moves: Bitcoin edges up to $40,600 after U.S. CPI rose a new 40-year high in March. Monero shines as investors have a relook at tokens offering anonymity.
• Featured Story: Ichi tokens plunge 90% after bad debt fiasco.

And check out the CoinDesk TV show “First Mover,” hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9 a.m. U.S. Eastern time.

• Chris Giancarlo, senior counsel, Willkie Farr & Gallagher
• Sasha Ivanov, founder and lead developer, Waves
• Benoit Bosc, global head of product, GSR

Market Moves

By Omkar Godbole

Editor's note: This newsletter was produced prior to the release of CPI data, which showed inflation rising a faster-than-expected 1.2% in March to an annual pace of 8.5%. The core rate, however, rose a less-than-expected 0.3% in March to an annual pace of 6.5%.

The crypto market was a sea of red early Tuesday as investors braced for a critical U.S. inflation report, which is expected to show the cost of living in the world's largest economy rose 8.3% year-over-year in March following February's 7.9% reading.

The core inflation, which strips out the volatile food and energy component, is expected to have risen 6.6% from a year earlier after a 6.4% increase in February. The data is scheduled for release at 12:30 UTC.

On Monday, White House press secretary Jen Psaki told reporters that the impending inflation report could show extraordinarily elevated price pressures, thanks to disruptions in energy and food markets caused by Russia's war on Ukraine.

A higher-than-expected number could bring additional selling pressure to risk assets, including cryptocurrencies.

"Due to the Russia/Ukraine war, core inflation reading is key to watch out for, as this strips out gas and food, giving the Federal Reserve the green light to continue to hammer the market with aggressive policy," Marcus Sotiriou, an analyst at U.K.-based digital asset broker GlobalBlock, said in an email.

The headline figure also matters, as higher food and energy costs can keep traditional investors from allocating money to risky assets.

"With soaring inflation, retail investors do not have enough money to invest significant amounts in what they deem as 'risky' assets like cryptocurrencies," Sotiriou said.

Crypto funds have registered outflows ahead of the CPI release, perhaps fearing a strong hawkish reaction to a hotter-than-expected inflation data.

Data tracked by ByteTree shows the number of coins held by the U.S. and Canadian closed-ended funds and Canadian and European exchange-traded funds has dropped by over 5,776 BTC (worth $243 million) to 855,980 BTC.

There is still hope for the bulls from a technical analysis standpoint, as the total market capitalization remains above the Ichimoku cloud support.

Acceptance under the cloud would expose yearly lows near $1.5 trillion.

Monero shines

The privacy-focused Monero or XMR remained on bid, despite macro-induced weakness in the broader market.

The biggest privacy coin by market value traded at $240 at press time, representing a 10% gain on the day, according to CoinDesk data. The cryptocurrency was one of the top 10 best-performing cryptocurrencies of the past 30 days.

Investors seem to be having a relook at coins offering anonymity in the wake of heightened geopolitical uncertainty worldwide, according to Lux Thiagarajah, head of trading at BCB Group, a business-to-business provider of banking rails to crypto companies.

"Monero's appeal lies in the fact that it is a privacy coin. Since Russia invaded Ukraine and the West sanctions imposed on Kremlin, privacy coins such as Monero and Zcash have benefitted," Thiagarajah said in a Twitter chat.

"Greater focus was also placed on these privacy coins ever since President Joe Biden's executive order regarding cryptocurrencies. With greater scrutiny of cryptocurrencies by governments and the increased rhetoric around CBDCs (central bank digital currency)," Thiagarajah added, saying that dip demand is likely to be strong if the market and political turmoil continues.

Latest Headlines

• Financial Services Company DTCC Working With Digital Dollar Project on CBDC Prototype
• Shiba Inu, Solana Tokens Among Four Added to Robinhood
• Morgan Stanley Says US Could Regulate Stablecoin Issuers Like Banks
• How Ichi Tokens Plunged 90% After Bad Debt Fiasco on Rari
• IOST Foundation Starts $100M Fund for EVM Developers
• White House in Damage Control Mode as Crypto Markets Brace for 8%-Plus Inflation
• NFT Marketplace Gem.xyz Ousts Developer Over 'Pattern of Sexual Misconduct'
• Long Crypto Traders Feel Pain as Bitcoin's Slide Leads to $430M in Liquidations

Ichi Tokens Plunge 90% After Bad Debt Fiasco

By Omkar Godbole

Ichi’s ICHI governance tokens have plunged 90% in the past 24 hours after a series of cascading liquidations in its pool on yield-generating platform Rari, data shows.

“The Ichi Fuse Pool (#136) is currently experiencing bad debt due to cascading liquidations,” Rari said in a tweet late Monday. “This is a permissionless pool that is owned and operated by Ichi Foundation.”

The slump occurred as Rari's Fuse protocol automatically sold holdings in Pool 136 to support the pool's value. However, low liquidity for the token on decentralized exchanges (DEX) meant the price suddenly plunged, and the pool was drained. At the time of writing, there is no liquidity as the entire pool was wiped out as crypto prices declined yesterday.

Read The Full Story Here: How Ichi Tokens Plunged 90% After Bad Debt Fiasco on Rari

Today’s newsletter was edited by Omkar Godbole and produced by Bradley Keoun and Stephen Alpher.