Market Wrap: Bitcoin Stuck Below $40K, Altcoins See Less Selling Pressure

Most cryptocurrencies experienced choppy trading conditions on Thursday, indicating a lack of conviction among traders and investors.

Geopolitical uncertainty has kept investors on edge, especially as Russia attacks on Ukraine intensify. Meanwhile, talks between diplomats have faltered, as the two sides didn't reach an agreement on a cease-fire on Thursday.

On the macro front, the European Central Bank announced its plans to phase out of its bond-buying program by September, which could lead to higher interest rates. John Hardy, head of foreign-exchange strategy at Saxo Bank, described the announcement as a "game-changer" in a note on Thursday, pointing to growing pressure on central banks to combat inflation by tightening monetary policy, which could weigh on speculative assets.

Cryptos and stocks were slightly lower on Thursday, while oil prices declined. Traditional safe havens such as gold and the U.S. dollar traded higher.

Alternative cryptocurrencies (altcoins) experienced less selling pressure relative to bitcoin (BTC) on Thursday. Ether (ETH) is down 3% over the past 24 hours, compared with a 6% decline in BTC. Meanwhile, STX, the native token of the Stacks network that is used to fuel smart contracts, rose by as much as 20% on Thursday.

Latest prices

●Bitcoin (BTC): $39,560, −5.40%

●Ether (ETH): $2,616, −2.77%

●S&P 500 daily close: $4,260, −0.43%

●Gold: $2,002 per troy ounce, +0.81%

●Ten-year Treasury yield daily close: 2.01%

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

Shifting correlations

Bitcoin's correlation with the S&P 500 has risen over the past year, partly because of the increase in volatility in assets around the world. Typically, high volatility coupled with rising inflation causes a positive shift in correlations, especially between stocks and bonds.

Investors tend to reduce their exposure to risk during times of market stress. And the rising correlation between the S&P 500 and bitcoin could point to a broader shift away from speculative assets.

This time, however, rising inflation is thrown into the mix. Commodities, a traditional inflation hedge, tend to rally during the start of an inflationary cycle. Therefore, the correlation between bitcoin and commodities collapsed in recent months to more normal levels (zero correlation).

A surge in demand for speculative assets occurred after the March 2020 market sell-off, and at the present time, the macroeconomic environment has caused investors to unwind their risky bets. That could point to a period of lower returns for both equities and cryptocurrencies.

Chart below was created using Koyfin, a financial data platform.

Altcoin roundup

• THORChain’s RUNE surged 37% after DeFi synthetic assets goes live: Cross-chain protocol THORChain went live with synthetic assets trading on its platform Wednesday night, causing prices of its native token, RUNE, to jump as much as 37% from Wednesday's low of $4.05 to Thursday's peak of $5.56. Its trading volume rose 93% in the past 24 hours. In this case, the synthetic assets – or blockchain-based representations of another asset – are backed by half the value of their underlying asset and half in RUNE. That allows users to hold and trade a representative of a layer 1, or base, blockchain asset faster and at a lower cost, according to CoinDesk’s Shaurya Malwa. Read more here.
• Fantom-based Algo protocol Fantasm exploited for $2.6M: Fantom-based algorithmic assets protocol Fantasm Finance was exploited for over $2.6 million worth of crypto early on Thursday, with the stolen tokens swapped for ether using privacy protocol Tornado Cash. “Our FTM collateral reserve has been exploited, there is still 1,820,012 FTM pool balance remaining currently for redemption,” the project's leaders tweeted. FTM is Fantom’s native token and one of the tokens used as collateral backing on Fantasm, according to Shaurya Malwa. Read more here.
• JustCarbon, Likvidi launch blockchain markets for carbon credits: JustCarbon and Likvidi both announced the start of trading platforms for tokenized carbon credits, giving participants the ability to trade greenhouse gas emissions and lower their carbon footprints. JustCarbon opened a marketplace for its JustCarbon Removal Units (JCRs), it said Thursday. Likvidi announced a platform for its Liquid Carbon Credit (LCO2) on Wednesday. Both LCO2 and JCRs are blockchain versions of carbon credits issued by Verra (VCS). JCRs also represent credits issued by Gold Standard. Each is equivalent to 1 metric ton of carbon, according to CoinDesk’s Will Canny. Read more here.

Relevant news

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Other markets

Digital assets in the CoinDesk 20 ended the day lower.

Largest Winners:

There are no gainers in CoinDesk 20 today.

Largest losers:

Asset Ticker Returns Sector Cosmos ATOM −5.5% Smart Contract Platform Bitcoin BTC −5.3% Currency Bitcoin Cash BCH −5.3% Currency

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.