First Mover Asia: Bitcoin, Ether Tumble Ahead of Federal Reserve Meeting

(Edited by James Rubin)

Good morning. Here’s what’s happening this morning:

Market moves: Bitcoin fell as investor jitters grew over the upcoming Fed decision on combating inflation.

Technician’s take: A breakdown in BTC could damage the intermediate-term trend despite oversold signals.

Prices

Bitcoin (BTC): $46,963 -6.7%

Ether (ETH): $3,800 -8.75%

Markets

S&P 500: $4,668 -0.9%

Dow Jones Industrial Average: $35,650 -0.8%

Nasdaq: $15,413 -1.3%

Gold: $1,786 0.2%

Market moves

Bitcoin fell by more than 7% on Monday, the biggest daily percentage drop since Dec. 4, as stocks in the U.S. also declined ahead of a Federal Reserve monetary policy decision later this week.

The Fed is expected to release its decision on Wednesday on whether it will move faster to wind down its bond purchases and signal it will start raising interest rates next year.

While a low interest rate environment has sent both stock and crypto markets skyrocketing this year, a rate hike and ending easy-money policies more quickly could, however, turn the market in a bearish direction.

Ether also fell sharply on Monday, despite the fact that the No. 2 cryptocurrency by market capitalization previously proved it was more resilient to macro headwinds than bitcoin. At the time of publication, ether was down by about 10% at one point in the past 24 hours.

The ether-to-bitcoin price chart, an indicator of bitcoin’s dominance relative to ether, dropped accordingly, after reaching its highest level since 2018.

According to crypto trading data firm Kaiko, the ether-to-bitcoin ratio chart has historically served as a gauge for investor sentiment.

“When the ratio increases, it suggests investors are rotating funds into ethereum and altcoin [alternative cryptocurrencies] markets, and vice versa,” Kaiko wrote in its newsletter on Monday. “Since the end of October, the ratio has been on a steady upward trend and recently topped its highest level since 2018.”

Technician’s take

Bitcoin Drifts Lower, Risks Testing $40K Support

Bitcoin (BTC) remains under pressure as buyers failed to break above $50,000 over the past week.

The cryptocurrency is down about 6% over the past 24 hours and was trading around $47,300 at the time of publication.

Immediate support is seen at the 200-day moving average (around $46,700), which is also the bottom of a weeklong price range. Given negative momentum signals, however, bitcoin is at risk of breaking below support, which could damage the intermediate-term trend.

For now, the relative strength index (RSI) is the most oversold since May, which could encourage short-term buying. Still, upside appears to be limited toward the $50,000 resistance level.

If a breakdown occurs, the next level of support is seen around $40,000, which could stabilize the decline.

Important events

8:30 a.m. HGT/SGT (12:30 a.m. UTC): National Australia Bank business conditions/business confidence (Nov.)

12:30 p.m. HGT/SGT (4:30 a.m. UTC): Japan industrial production (Oct. YoY/MoM)

6 p.m. HGT/SGT (10 a.m. UTC): Eurostat industrial production (Oct. YoY/MoM)

7 p.m. HGT/SGT (11 a.m. UTC): European Blockchain Convention

CoinDesk TV

In case you missed it, here are the most recent episodes of “First Mover” on CoinDesk TV:

Blockchain Unicorn Watch, Lesson Learned From BadgerDAO’s $120M Hack and More

“First Mover” hosts spoke with Jonathan Manzi, CEO of Beyond Protocol, a blockchain project that focuses on trust and security, after BadgerDAO recently revealed details of how it was hacked for $120 million. First Mover covered crypto market insights from Eaglebrook Advisors Director of Research Joe Orsini. Plus, what blockchain unicorns have emerged in North America this year? Blockchain Coinvestors Managing Partner Matthew Le Merle offered details from his list.

Latest headlines

Myanmar’s Shadow Government Adopts Tether as Official Currency: Report: The National Unity Government said via a Facebook post that it now accepts USDT.

Metaverse Company InfiniteWorld to Go Public in $700M SPAC Merger:The stock will debut on the Nasdaq early next year.

Tezos ‘Exchange-Traded Cryptocurrency’ Launches on German Exchange: Altcoin institutional products are on the rise as investors look beyond Bitcoin and Ethereum.

Binance Singapore Drops Crypto License Plans in City-State: Binance has already set up an entity for a global headquarters, the exchange’s CEO Changpeng “CZ” Zhao said.

UAE Wealth Fund Mubadala Investing in Crypto Ecosystem: CEO:The wealth fund is no longer skeptical about crypto, and is investing in blockchain and other related technologies, CEO Khaldoon Al Mubarak said.

Longer reads

Chatex Users Ask US Treasury to Release Crypto Frozen by Sanctions:Retail customers were swept up by actions meant to punish a crypto firm accused of money laundering.

Today’s crypto explainer: What Is a Bitcoin Futures ETF?

Other voices: The Rise of Cryptocurrency Ponzi Schemes: Scammers are making big money off people who want in on the latest digital gold rush but don’t understand how the technology works. (The Atlantic)

Said and heard

“But crypto users worldwide may soon face similar predicaments as U.S. regulators, with their global reach, try to rein in the illegal use of cryptocurrency. The prospects for these users to recover their money are unclear, even if they are innocent of any wrongdoing.” (CoinDesk – Chatex Users).... “Some people make the mistake of assuming regulators are more independent and impartial than they actually are. If this year – even the past week – has shown us anything, it should be a realization that priorities and emphasis can shift, sometimes dramatically, with a change in administration and senior leadership. The multi-regulator system reduces the shocks from this risk.” (CoinDesk - Matthew Homer).... ”So you thought all the guys who bought the dip before just got lucky? No, it’s never that easy.” (Changpeng Zhao)