By Jimmy He
Hi, I’m Jimmy He, here to take you through the day’s crypto market highlights and news.
Bitcoin (BTC) leveled off to around $20,000 in Wednesday trading, down 1% from its high of $20,720 the previous day. The oldest cryptocurrency has changed hands largely in the $18,000 to $21,000 range for most of the past month as investors gauge the impact of rising inflation and macroeconomic uncertainty.
The majority of alternative currencies (altcoins) were in the green on Wednesday with Avalanche’s AVAX leading the charts, up 5.5% in the last 24 hours. Ether (ETH), the second-largest cryptocurrency by market capitalization after bitcoin, was up 0.7%.
An increasingly correlated asset
For much of its short history, bitcoin has been uncorrelated to traditional markets, which served as a desirable quality for recession-conscious investors. However, according to data from Coin Metrics, bitcoin’s correlation to U.S. equities, specifically the S&P 500, has strengthened since March 2020.
“The correlation hit a new all-time high in Q2 2022 with BTC and U.S. equities moving almost in lockstep,” Coin Metrics wrote in a newsletter. “At the same time, BTC moved increasingly against risk indices like the VIX.”
The release of the June consumer price index next week may show whether the recent hawkish monetary policies of the U.S. Federal Reserve have been effective. If prices decline and other economic indicators also continue their recent descent, investors may feel more confident that the U.S. is solving the dual problems of inflation and potentially steep economic contraction. If the CPI continues to increase, markets could be discouraged.
●Bitcoin (BTC): $20,328 −1.2%
●Ether (ETH): $1,157 −0.0%
●S&P 500 daily close: 3,845.08 +0.4%
●Gold: $1,738 per troy ounce −1.3%
●Ten-year Treasury yield daily close: 2.91% +0.1
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.
Voyager is next crypto lender to fall
Today’s positive crypto market movements were overshadowed by crypto lender Voyager’s filing for Chapter 11 bankruptcy protection late Tuesday.
Voyager’s decision is part of the domino effect of crypto hedge fund Three Arrows Capital’s liquidity problems. The Singapore-based firm filed for Chapter 15 bankruptcy on Friday. In Voyager’s case, according to writer Frances Coppola, nearly 50% of total assets were from its loan book and nearly 60% of the loan book consisted of loans to Three Arrows Capital.
Crypto companies – and lenders in particular – have faced solvency issues in recent weeks, with several stopping customers from withdrawing their funds. Celsius started this trend last month, announcing in mid-June that it would suspend withdrawals. CoinLoan, CoinFLEX and Voyager itself all announced restrictions or outright halts on withdrawals in recent days, Nikhilesh De and Danny Nelson reported Wednesday.
Voyager’s VGX token plummeted to a low of 20 cents within hours of filing for bankruptcy and is now trading at around $0.21, 12% down in the last 24 hours.
Ethereum testnet transitions to proof-of-stake: Ethereum’s Sepolia proof-of-work chain successfully merged with its proof-of-stake chain on Wednesday, taking the platform one step closer to its own Merge moment. This is the penultimate test environment network (testnet) merge before Ethereum makes its long-awaited transition. Read more here.
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