First Mover Americas: Bitcoin Belted by Rate Fears

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CoinDesk Market Index (CMI): 1,035 −1.0%

Bitcoin BTC$90,068.45: $22,047 −1.4%

Ether (ETC): $1,557 −0.4%

S&P 500 futures: 3,989.00 −0.0%

FTSE 100: 7,907.78 −0.1%

Treasury Yield 10 Years: 3.98% −0.0

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Bitcoin fell to a three-week low Wednesday as Federal Reserve Chairman Jerome Powell's hawkish testimony to the U.S. Senate Banking Committee on Tuesday spurred traders to price in a higher "terminal rate." Bitcoin dropped to $21,871 during Asian trading hours, a three-week low, and ether nearly tested Tuesday's low of $1,535. On Capitol Hill, Powell implied that the Fed is likely to raise rates more than previously expected, warning that the process of pushing inflation down to the central bank's 2% target has a "long way to go." Since last year, the Fed has raised rates by 4.5% percentage points, roiling risky assets like cryptocurrencies. Analysts now expect the Fed to eventually raise its benchmark interest to as high as 5.65%. A month ago, the expectation was for the rate to peak at 4.9%.

Binance.US cleared a major hurdle in its effort to acquire the assets of bankrupt crypto lender Voyager Digital in a deal worth over $1 billion after Michael Wiles, a U.S. bankruptcy judge in the Southern District of New York, overruled objections to the proposed acquisition. While the judge said he would still work through the confirmation order, he indicated he was in favor of approving the deal. Binance.US may still have to clear certain regulatory hurdles before the deal can be completed. Voyager's VGX token surged over 8% in the minutes after the ruling.

Grayscale Bitcoin Trust's (GBTC) discount to the net asset value of the trust's shares has narrowed to 35%, the lowest level since Nov. 7, following what seemed to be a favorable court hearing on Tuesday for Grayscale Investments. The discount narrowed to just below 35% after the hearing where a panel of appeals court judges appeared to be skeptical about the U.S. Securities and Exchange Commission's arguments in rejecting Grayscale’s bid to convert the trust into an exchange-traded fund. The judges questioned the SEC's logic in distinguishing between bitcoin spot market prices and futures market prices. The SEC has approved ETFs for bitcoin futures. Grayscale and CoinDesk are both owned by crypto conglomerate Digital Currency Group.

Chart of the Day

• The chart compares bitcoin's annualized three-month basis, or the difference between futures and spot market prices, on offshore exchanges such as Binance, OKX and Deribit with that on the Chicago Mercantile Exchange.
• The premium on the CME has dropped sharply to 2.2% over the past week.
• "The falling futures basis further suggests that CME selling sent BTC lower during the sell-off," K33's research analysts said in a note sent to clients.
• Bitcoin has pulled back from $25,000 to $22,000 amid issues at crypto-friendly Silvergate Bank, operational bottlenecks at major exchanges and macroeconomic uncertainty.

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