First Mover Asia: Fed Decision on Stimulus Money Buoys Crypto Markets

(Edited by James Rubin)

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

Market moves: Bitcoin jumps above $49,000 after U.S. Fed’s decision to accelerate stimulus withdrawal.

Technician’s take: Bitcoin’s price momentum is stabilizing after several weeks of low trading volume.

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

Prices

Bitcoin (BTC): $48,843 +1.3%

Ether (ETH): $4,014 +4.5%

Markets

S&P 500: $4,709 +1.6%

Dow Jones Industrial Average: $35,927 +1.1%

Nasdaq: $15,565 +2.1%

Gold: $1,777 +0.2%

Market moves

Bitcoin, the No. 1 cryptocurrency by market capitalization, jumped above $49,000 on Wednesday, after U.S. Federal Reserve officials approved the acceleration of the central bank’s plan to withdraw coronavirus pandemic stimulus efforts.

Following the news, crypto and traditional markets turned higher as the central bank’s decision diminished investor uncertainty. The Fed bankers signaled they are ready to raise the short-term interest rate at least three times next year to battle the current high inflation.

The whole crypto market was watching the Fed decision closely because many believe tightened monetary policy is typically considered bearish for risk assets, crypto included. Prices for bitcoin and other crypto fell sharply in recent weeks because investors were worried about the Fed’s anticipated hawkish policy adjustment. The price rise after Wednesday’s news showed “a relief rally,” as CoinDesk reported.

Bitcoin’s trading volume across major centralized exchanges was slightly higher on Wednesday compared with a day ago. Prices for other major cryptocurrencies also rose. Ether went above $4,000 after it slipped below $3,700 earlier this week.

Technician’s take

Bitcoin Rises Toward $50K; Resistance Seen Around $52K

Bitcoin BTC$87,082.20 held support around $46,000 and is attempting to reverse a short-term downtrend. Still, upside appears to be limited toward the $52,000 resistance level, which is roughly midway through the 20% sell-off that occurred earlier this month.

The relative strength index (RSI) on the daily chart is the most oversold since May 20, which preceded a strong price recovery. Momentum is also stabilizing after several weeks of low trading volume.

On the weekly chart, price conditions are less favorable as the uptrend appears to be slowing. For now, this suggests short-term buyers could struggle beyond $50,000-$55,000.

Important events

12 a.m. HGT/SGT (8 a.m. UTC): Australia inflation expectations (Dec.)

12:30 a.m. HGT/SGT (8:30 a.m. UTC): Australia full-time/part-time employment (Nov.)

China foreign direct investment (YTD/Nov. YoY)

7:40 p.m. HGT/SGT (11:40 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:

Sen. Warren: Stablecoins Pose Risks to Consumers and Our Economy, Decential Co-Founder Matt Leising on DAOs’ Evolution and What Mainstream Media Gets Wrong About Crypto

“First Mover” hosts spoke with CoinDesk Global Policy & Regulation Managing Editor Nikhilesh De for the key takeaways from the U.S. Senate Banking Committee hearing on stablecoins yesterday. Matt Leising, co-founder of DeCential and author of “Out Of The Ether,” shared his views on DAOs’ evolution and outlook and what the mainstream media gets wrong about crypto. Plus, First Mover covered crypto markets insights and updates on the state of crypto in El Salvador from Sovryn co-founder Edan Yago.

Latest headlines

Fed Speeds Up Stimulus Withdrawal, and Bitcoin Jumps:The Fed will reduce its bond purchases by $30 billion every month to wind them down early next year, doubling from the current pace of withdrawal of $15 billion every month. Some crypto investors say the $120 billion-a-month program helped to bolster bitcoin’s appeal as an inflation hedge.

India’s Crypto Bill Likely to Be Delayed for Several Weeks: Reports: The bill, which needs Cabinet approval to be heard by the full parliament, isn’t on the agenda for today’s meeting.

Katie Haun Leaving A16z to Start Own Crypto VC Firm: Haun said on Twitter she’d be launching a “fund focused on crypto and [Web 3] early next year.”

Binance, MDI-Led Consortium to Create Crypto Exchange in Indonesia:The companies have set up a JV that will focus on blockchain development in the country.

Animoca Brands Leads $130M Investment in Venture Accelerator Brinc for Web 3 Expansion:The funds will be used to lead Brinc’s expansion into DeFi and crypto gaming.

Longer reads

The Elon Effect: How Musk’s Tweets Move Crypto Markets:Elon Musk has repeatedly shown interest in toying with the crypto markets. We dive into how Tesla’s CEO has swayed the prices of DOGE and BTC during 2021.

Today’s crypto explainer: What Are NFTs and How Do They Work?

Other voices: Cryptocurrency: Its time has come(The Guardian)

Said and heard

“Today [Chris Dixon] and I shared with the a16z crypto team that I will be launching my own fund focused on crypto and Web 3 early next year ... The current crypto fund will be my last at the firm. When Chris and I started our first crypto fund in 2018, it was a moonshot experiment. Thanks to the hard work of many, it has exceeded both of our wildest expectations. Today it’s more apparent than ever that [Web 3] will transform the internet.“ (Katie Hahn, a16z partner)... “What’s right is right ... Good on the SEC for permitting futures-based [exchange traded products]. But there is no rational basis for disallowing a spot-based ETP while allowing a futures-based ETP – both are reliant on Bitcoin’s underlying price. (Paul Grewal, Coinbase chief legal officer)... ”Tesla will make some merch buyable with Doge & see how it goes.”(Elon Musk)