First Mover Asia: Fed Tightening, Economic Woes Continue to Spook Crypto Investors

Good morning. Here’s what’s happening:

Market moves: Bitcoin and ether go down and then up; altcoin prices are mixed.

Technician's take: BTC appears oversold into the Asia trading day, but upside remains limited.

Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis.

Prices

Bitcoin (BTC): $42,463 +0.8%

Ether (ETH): $3,166 -1.3%

Top gainers

Asset Ticker Returns Sector Cardano ADA +9.1% Smart Contract Platform Litecoin LTC +4.0% Currency

Top losers

Asset Ticker Returns Sector Cosmos ATOM −7.9% Smart Contract Platform Chainlink LINK −7.2% Computing Polkadot DOT −7.2% Smart Contract Platform

Markets

S&P 500: $4,577 -1.8%

DJIA: $35,368 -1.5%

Nasdaq: $14,506 -2.6%

Gold: $1,813 0.3%

Market moves

Bitcoin couldn't make up its mind in Tuesday trading. It started the day with a short downward spiral that had its price headed for $41,000. But then it changed course. By the end of trading in U.S. equities markets, it was on its way to where it began the day, above $42,000. At the time of publication, the largest cryptocurrency in market capitalization was trading above $42,500, up slightly for the day.

Ether, the second-largest crypto by market cap, followed a similar pattern, sinking and then rising. At the time of publication, it was trading about $3,150, approximately flat over the past 24 hours. The other leading alternative coins (altcoins) varied with a few gaining a tick and others off slightly.

The mixed performance reflected ongoing nervousness about the U.S. and global economies. Major stock indicators fell with the S&P 500 off 1.8% and the Nasdaq down 2.6% as investors looked to exit companies that are losing money. Bond yields rose amid widespread fears that the U.S. central bank will raise interest rates faster and more steeply than expected.

"Bitcoin seems poised to continue to trade as a risky asset and remains vulnerable to growing fears over aggressive Fed tightening," OANDA Senior Market Analyst Edward Moya told CoinDesk by email. "The surge in Treasury [bond] yields may continue this week, and that could test some bitcoin hodlers and altcoins."

But Moya is optimistic about a bitcoin price rebound. "The breakout in Treasury yields was not expected to happen this quickly, but when it ends that could be the all-clear signal for many traders to scale back into cryptocurrencies," he said.

Technician's take

Bitcoin Drifts Lower; Stuck Between $40K Support and $45K Resistance

Bitcoin (BTC) has traded in a sideways range over the past week, although buyers continued to hold support around $40,000. The next level of resistance is between $43,000-$45,000, which could limit short-term price gains.

BTC is roughly flat over the past 24 hours as most technical indicators remain neutral into the Asia trading day.

The relative strength index (RSI) on the four-hour chart is the most oversold since Jan. 7, which preceded a 10% price bounce. In a downtrend, however, price reaction to oversold readings could be delayed by a few days.

For now, sellers remain in control as long-term momentum signals weaken.

Important events

10 a.m. HKT/SGT (2 a.m. UTC): Eurostat construction output (Nov. MoM/YoY)

1:30 a.m. HKT/SGT (5:30 a.m. UTC): U.S. building permits (Dec. MoM/Change)

2:15 p.m. HKT/SGT (6:15 a.m. UTC): Speech by Bank of England Governor Andrew Bailey

23:50 p.m. HKT/SGT (3:15 p.m. UTC): Japan imports/exports (Dec. YoY)

CoinDesk TV

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

Bitcoin Down as Stock Futures Tumble, Former Acting Comptroller of the Currency Brian Brooks Shares View on US Stablecoin Regulation, FTX Sets Up $2B to Invest in Crypto Startups

Former Acting Comptroller of the Currency and current Bitfury CEO Brian Brooks joined "First Mover" to discuss the U.S. stablecoin regulations. Meanwhile, FTX announced a $2 billion venture fund to invest in crypto industry startups. FTX Ventures lead Amy Wu shared details from behind the scene. Bitcoin is down along with stock futures. OANDA Senior Market Analyst Edward Moya provided his market analysis. Plus, a regulatory update from CoinDesk Managing Editor for Global Policy & Regulation Nikhilesh De.

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Said and heard

“China is on a very different path than the rest of the world, it is a striking difference,” Ielpo said. “We are nervous about what’s happening in China right now.” (Florian Ielpo, head of macro at Lombard Odier Investment Managers/The Wall Street Journal) ... “I would hope that that’s the case, but that would only be the case if we don’t get another variant that eludes the immune response.” (Anthony Fauci speaking at The World Economic Forum on the Omicron variant of the coronavirus)..."There should absolutely be more of an effort to draw a distinction between actual scams and legitimate efforts, but the term is what it is and, again, there shouldn’t be language policing of free markets. I advocate the use of softer words: “Ponzi-like” or “Ponzi-esque" because we're rarely ever discussing the real deal." (CoinDesk columnist Daniel Kuhn)