First Mover Asia: Bitcoin Hovers Near $17.3K, but Does It Have Staying Power?

Good morning. Here’s what’s happening:

Prices: Bitcoin clung to its most recent perch comfortably above $17K as investors continue to hope for a more dovish U.S. central bank.

Insights: DeFi total value locked continued its recent rebound over the weekend.

Prices

CoinDesk Market Index (CMI) 875.87 +12.8 ▲ 1.5% Bitcoin (BTC) $17,273 +313.7 ▲ 1.8% Ethereum (ETH) $1,292 +36.1 ▲ 2.9% S&P 500 daily close 4,071.70 −4.9 ▼ 0.1% Gold $1,819 +23.4 ▲ 1.3% Treasury Yield 10 Years 3.51% ▼ 0.0 BTC/ETH prices per CoinDesk Indices; gold is COMEX spot price. Prices as of about 4 p.m. ET

Bitcoin Holds Steady Over $17K

By James Rubin

Is $17,000 the new $16,000 for Bitcoin?

Will a recent uptick in investor optimism about the economy outweigh worries about the fallout from crypto exchange FTX's collapse?

Crypto markets remained noncommittal over the weekend.

The largest cryptocurrency by market capitalization was recently trading near $17,300, an almost 2% gain over the past 24 hours and consistent with its performance for the past five days.

BTC climbed above $17,000 on Wednesday and has held fast above this support following dovish remarks by U.S. Federal Reserve Chair Jerome Powell, who indicated a day later that the Federal Open Market Committee (FOMC) would likely raise interest rates 50 basis points (bps) instead of continuing its current diet of 75 bps increases. Powell noted encouraging signs that inflation and the still vibrant job market were slowing.

In an email to CoinDesk, Joe DiPasquale, CEO of crypto fund manager BitBull Capital, wrote that "the market" had "responded positively to Powell's speech, although he added that "we may want to see bitcoin consolidating above $17K and possibly testing $20K before we expect a sustained recovery."

"On the downside, $16K is a key support, losing which we are likely to see bitcoin trending lower," DiPasquale wrote.

Ether remained steadfast near $1,300, up about 3%. On Dec. 1, CoinDesk market analyst Glenn Williams noted that ether's price had outperformed bitcoin over the previous 10 days, increasing 15.4% versus BTC's 7.7% rise. Williams wrote that a so-called crossover of the ETH/BTC 10-day moving average above the 100-day moving average is often a bullish sign, although he added that the recent sample size is still too small to come to a conclusion.

Other major cryptos were largely in the green with SOL, the token of the smart contracts Solana blockchain platform, rising more than 4%, and ATOM, the token of the decentralized blockchain network, Cosmos, recently up more than 3%. The CoinDesk Market Index (CDI), an index measuring cryptos' performance, jumped almost 1.5%.

U.S. stock indexes traded roughly sideways on Friday after an encouraging week that saw the S&P 500 climb above its 200-day moving average for the first time since the spring. The S&P, which has a strong component, fell 0.1% on Friday but was up 1.5% for the week. The tech-heavy Nasdaq inched down 0.2% on Friday.

Investors will be eyeing the U.S. Commerce Department's Monday release of durable goods orders for November, with initial projections for a second consecutive 1% gain month-over-month. On Friday, the University of Michigan's widely watched consumer sentiment index is expected to tick up a few fractions of a percentage point in its preliminary December reading from the the previous month.

In a weekly note to investors, First Republic Bank noted a slowdown in manufacturing, "showing broader economic growth is moderating," but also highlighted improvements in the supply chain that had lowered costs, calling the reductions "encouraging news on the inflation front."

Meanwhile, Sam Bankman-Fried continued his recent tour of semi-confessional interviews, with the former FTX CEO telling The Wall Street Journal: "I ask myself a lot how I made a series of mistakes that just don't seem dumb, they seem like the type of mistakes I could see myself having ridiculed someone else for having making."

BitBull's DiPasquale wrote that he will be watching the impact of upcoming FTX hearings related to its filing for Chapter 11 bankruptcy protection in the U.S. along with the outcome of the December FOMC meeting. "Any dovish comments then could see the market moving higher," he wrote of the latter.

Biggest Gainers

Asset Ticker Returns DACS Sector Solana SOL +4.4% Smart Contract Platform Chainlink LINK +3.7% Computing Cosmos ATOM +3.2% Smart Contract Platform

Biggest Losers

Asset Ticker Returns DACS Sector XRP XRP −0.4% Currency

Insights

DeFi TVL Continues Its Recent Momentum

By Sam Reynolds

Crypto investors have been focusing hard lately on the wider impact of crypto exchange FTX’s collapse and macroeconomic uncertainties. They have watched bitcoin hover at $17,000 support after wrestling with $16,000 for large portions of November. Will it tip lower or higher in the weeks ahead?

Overlooked in the focus on pricing is the slow, steady recovery in the total value locked (TVL) in decentralized finance (DeFi) protocols. Data from DeFi Llama, a DeFi aggregator for TVL, shows that TVL is trickling back to the 10 biggest DeFi protocols on Ethereum as asset prices rise.

The increase follows the implosion of TVL in Solana-based protocols in mid-November because of a lack of confidence in a platform that’s perceived as being closely tied to Sam Bankman-Fried, and due to falling asset prices.

Lido has seen its TVL increase by 3.69% during the last week, Curve is up 3%, and Compound Finance’s TVL is up by about 4.6%. Derivatives Decentralized Exchange GMX has seen its TVL rise by 6%.

The high correlation between the rise of TVL in major DeFi protocols and climbing token prices is a good thing, signaling that there’s still continued trust in DeFi, and that assets aren’t being withdrawn. Nansen data shows that protocols such as Curve.fi and dYdx have continued inflows of stablecoins during the past week.

The market’s continued confidence in DeFi is impressive, given ongoing concerns about security. Just last week another DeFi protocol, Ankr, was exploited because of shoddy code found by an attacker. Granted, Binance had frozen a significant amount of the stolen assets – but these major DeFi hacks seem to be a bimonthly occurrence.

Investors, nevertheless, appear willing to overlook such events, and instead, seem more focused on DeFi’s potential.

Important events.

10:00 a.m. HKT/SGT(2:00 UTC) European Union Retail Sales (YoY/Oct)

3:00 p.m. HKT/SGT(7:00 UTC) United States ISM Services PMI (Nov)

3:30 a.m. HKT/SGT(19:30 UTC) Reserve Bank of Australia Interest Rate Decision

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

Bitcoin Slips After November Jobs Report; US Justice Dept Calls for Independent Probe of Alleged FTX Fraud

The U.S. economy added 263,000 jobs in November, more than expected. The unemployment rate remained the same at 3.7%. Oanda Senior Market Analyst of the Americas Edward Moya discussed the impact of the new economic report on crypto markets. Following the FTX crash, could regulation go too far? Tonya Evans, Penn State Dickinson Law professor, joined "First Mover" to discuss. Plus, CoinDesk's Margaux Nijkerk explained why Dogechain is different from dogecoin.

Headlines

Bitcoin Miners’ FTX Contagion Exposure May Amplify Industry Pain: Core Scientific, Bitfarms and Genesis Digital Assets are among miners that have direct and indirect exposures to the fallout.

FTX Japan Plans to Restart Local Customer Withdrawals: The crypto exchange's subsidiary has confirmed Japanese customer funds will remain separate from the ongoing bankruptcy proceedings in the U.S.

Avalanche-Based DEX Trader Joe to Soon Deploy on Ethereum Scaling System Arbitrum: Trader Joe locked up over $95 million worth of tokens as of Friday and is among the most popular Avalanche-based products.

Dogecoin's Bitcoin-Beating Bounce May Be Bad News for the Market: In the past, outsized gains in DOGE have paved the way for a broader market sell-off.

US Justice Department Wants FTX Fraud Allegations to Be Investigated: The collapse was described as the "fastest big corporate failure in American history," in a court filing.