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Today’s Stories:
Bitcoin Tops $42K as Crypto Market Recovers to Pre-Terra Levels
Bitcoin Going From Boiling the Oceans to Draining Them, According to Critic
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This episode was hosted by Noelle Acheson. “Markets Daily” is executive produced by Jared Schwartz and produced and edited by Eleanor Pahl. All original music by Doc Blust and Colin Mealey.
Audio Transcript: This transcript has not been edited and may contain errors.
It’s Monday, December 4th, 2023 and this is Markets Daily from CoinDesk. My name is Noelle Acheson, CoinDesk collaborator and author of the Crypto is Macro Now newsletter on Substack. On today’s show we’re talking about strong crypto moves, oil price pessimism, bitcoin criticism and more. So you don’t miss an episode, be sure to follow the podcast on your platform of choice, and turn on notifications. And just a reminder, CoinDesk is a news source and does not provide investment advice.
Now, a markets roundup.
Crypto markets were active during the weekend, building on Friday’s positive momentum. Then, during Asian trading hours today, interest picked up even further, briefly pushing bitcoin through $42,000, for the first time since early April of last year. It has since settled back some, but seems for now to be holding within a new range.
According to CoinDesk Indices, at 9 a.m. Eastern time today, bitcoin was trading up 5.2% over the past 24 hours, at $41,750 dollars. Ether was up 3.5%, trading at 2,233 dollars.
What triggered this jump? Truthfully, it’s always hard to pin down any specific catalyst. It could be one or several large orders, it could be short-covering, it could be a rumor getting traders excited, or maybe all of the above.
As we’ve been discussing here regularly, the backdrop is positive for crypto assets more broadly. Growing institutional interest, the imminent likelihood of a U.S. bitcoin spot ETF, declining interest rate expectations and increasing market liquidity - all of these are positive drivers for crypto assets, and we could be seeing more large investors wake up to this new environment.
For now, this still seems to be a bitcoin-led rally, as bitcoin’s market dominance is heading up. Bitcoin currently accounts for over 54% of the total crypto market cap, up from less than 52% just a couple of weeks ago. Crypto-related stocks are also doing well - on Friday, Coinbase jumped 7 and a quarter percent, while Microstrategy climbed almost 6 percent.
In macro matters, this week we’re going to be talking a lot about U.S. employment data. There’s a strong flow of key metrics on the calendar: Tomorrow, we get the latest reading on U.S. job openings. On Wednesday, we get the ADP National Employment report. On Thursday, we have the Challenger job cuts, and unemployment benefit claims.
All these will be building up to the climax on Friday when we get the latest official U.S. jobs growth and unemployment rate. Expectations are for the unemployment rate for November to hold steady at 3.9%, while non-farm payrolls increase by 180,000, more than October’s increase of 150,000.
In a public appearance on Friday, Federal Reserve Chair Powell once again pushed back against expectations of interest rate cuts in the first half of 2024. At one stage he said, and I quote… “The FOMC is strongly committed to bringing inflation down to 2 percent over time, and to keeping policy restrictive until we are confident that inflation is on a path to that objective.” End quote.
He went on to repeat that the Fed was prepared to hike again if necessary, and that it was premature to conclude that a sufficiently restrictive stance has been reached. The market wasn’t buying it, and is now pricing in an almost 60% probability of the first rate cuts by March. At one stage on Friday, the yield on 10-year treasuries dropped as low as 4.2%, for the first time since early September.
In stocks, U.S. markets decided to join the optimism party on Friday. The S&P 500 and Nasdaq were up almost six tenths of a percent, while the Dow Jones climbed eight tenths. Futures this morning are pointing to some retracement.
In Europe, the main indices were up around 1% on Friday, but are trading flat to down so far today.
In Asia, sentiment was weak. Japan’s Nikkei fell six tenths of a percent in trading today, while the Shanghai Composite was down three tenths and the Hang Seng dropped just over 1 percent.
In commodities, oil markets have continued to head downward despite the latest round of announced production cuts from OPEC+. This decline also comes despite a couple of potential geopolitical flashpoints.
Yesterday, Venezuela held a public referendum on whether or not to annex an oil-rich region of neighbouring Guyana. The result was unsurprisingly an overwhelming yes, and should Venezuela go through with this, any resulting sanctions could hit Venezuelan production.
Also, the intensification of missile attacks by Houthi rebels on containers sailing through the Red Sea could be a problem for oil shipments through the Suez canal. Yet traders are choosing to focus on the likelihood of weaker demand due to a global economic slowdown.
Today, the Brent crude benchmark is down a further 1.7% on the day, trading at 78 dollars and 46 cents per barrel.
Gold responded yesterday to the continued drop in U.S. yields and a weaker dollar by soaring to an all-time high of 2,146 dollars. It has since retraced much of that jump, but is still up on the month so far, trading at 2,063 dollars per ounce. Its gain for the past week is 2.8%.
Stay with us – after the break we’re going to debunk yet another round of anti-bitcoin messaging.
Welcome back!
Today I want to address a commentary that was published in a scientific journal last week that has been widely and inaccurately reported on across mainstream media. Last week, data scientist for the Dutch central bank Alex de Vries wrote a commentary detailing how much water bitcoin mining uses. The implication is that this useless activity is consuming a valuable resource.
We’ve been here before – for years we’ve been pushing back on claims that bitcoin energy use was going to destroy the world, or at least significantly damage its environment. We seem to have largely won that argument, as you rarely hear politicians these days advocate for the regulation or even banning of bitcoin for environmental reasons. Instead, they have pivoted to focus on illicit use. The crypto ecosystem fought back on the environmental claims by patiently refuting each of the scaremongering accusations, until eventually facts won out, and you now often hear academics and even institutional research teams talk about bitcoin’s climate potential.
Now, we have to do the same with the latest claims, which include kind of crazy allegations such as each bitcoin payment consumes as much water as a swimming pool. That one was from the BBC. The Weather Channel insisted that a single bitcoin transaction uses 100 bathtubs of water, while the Independent went further and said that bitcoin consumes as much water as all the baths in Britain. There’s an image for you.
For the sake of time, I won’t go into full detail on everything the study and then the reporting get wrong, because it’s a long list.
But the broad strokes are:
1 – payments and transactions are not the same thing in bitcoin. And per transaction consumption data is very hard to calculate, because the daily number of transactions can vary. Blocks are predictable, but numbers of transactions are not.
2 – the calculations sum together two different water uses. There’s the direct use via cooling of mining machines. And there’s the indirect use, which is water consumed by electricity providers. Adding them together is like adding apples and tomatoes.
3 – much of the water used either directly or indirectly is not lost forever – it gets re-used.
And finally, 4, the calculations are not peer-reviewed, although mainstream media has reported on them as if they are. They are published as a commentary, and the reporting has overlooked that de Vries has a reputation for some outlandish predictions that have so far wildly missed their mark.
Needless to say, nothing is ever perfect, and the crypto industry has plenty of faults. It would be nice, though, if we could keep the criticisms to things that are actually true.
