Good morning. Here's what happened:
Prices: Bitcoin falls slightly, altcoins underperform even as stocks rise.
Insights: cryptocurrency trading firms try to solve problems that have plagued them.
Technician's take: BTC remains in a choppy trading range with limited upside potential.
PricesBitcoin
(BTC): $29,134 -1.6%
.Ether (ETH): $1,784 -8.4%
Biggest winners
There are no winners in CoinDesk 20 today.Biggest losers
.| Asset | Ticker | Income | DACS Sector |
|---|---|---|---|
| Cosmos | ATOM | -10.1% | Smart contracts platform |
| Solana | SOL | -9.1% | Platform for smart contracts |
| Ethereum | ETH | -7.5% | Smart contracts platform |
Bitcoin falls slightly, altcoins underperform, though stocks rise
Most major cryptocurrencies fell, although stocks rose on Thursday.
Bitcoin last traded at around $29,100, nearly unchanged from the previous 24 hours, after the largest cryptocurrency by market cap fell well below $29,000 earlier in the day. Ether lost more than 8% in the same period, changing hands below $1,800. The second largest cryptocurrency by market cap has spent most of the last three weeks moving above $1,900.
Other altcoins spent most of Thursday in the red, with SOL, CRO, and APE each losing at least 11% at certain points, as investors continue to favor BTC, considered the least risky among digital assets, amid lingering concerns about high inflation and an economic downturn. Bitcoin's market capitalization has skyrocketed recently compared to other cryptocurrencies.
"I'm not surprised that people are pulling back from cryptocurrencies," JJ Kinahan, vice president and chief market strategist at trading platform Tastytrade, told CoinDesk TV's First Mover program. "Bitcoin is probably the one [cryptocurrency] that's most established with retail investors that people trust to hold up."
The Dow Jones Industrial Average of blue-chip stocks has had at least some reason to cheer lately, rising for the fifth day in a row. Other indexes also rose as three major retail chains, Macy's, Dollar General and Dollar Tree, reported upbeat results, suggesting, at least temporarily, that consumers aren't done shopping. Retail sales contributed to the recovery in the U.S. economy, which has begun to slow in recent months.
The tech-heavy Nasdaq rose a hefty 2.6%, with Tesla (TSLA) and Amazon (AMZN) among the gainers, and the S&P 500 climbed nearly 2% just two days after entering the bear market zone, a designation reached when a stock index plunges 20% from its last peak.
Other recent news, however, was a stark reminder of the shaky balance of the global economy. In China, President Xi Jinping said that the country's economy was in some respects worse off than in the earlier stages of the COVID pandemic. A government-imposed freeze has slowed growth in China and driven up the unemployment rate. And investment giant Sequoia Capital offered a pessimistic assessment of economic conditions, encouraging the early-stage companies it funds to focus on cutting costs and boosting profitability.
Crypto investors will likely continue to be spooked by economic conditions and geopolitical unrest, a number of analysts said. The Fear and Greed Index rose slightly early Thursday and remains in the "extreme fear" range, while the overall market capitalization of the crypto market fell.
"The S&P trying to crack 4,000 while bitcoin is trying to crack $30,000 are both very important points that are very correlated in terms of confidence in the market and in bitcoin and assets overall," Tastytrade's Kinahan said.
MarketsS&P500
: 4,057 +1.9%
DJIA: 32,637 +1.6%
Nasdaq: 11,740 +2.6%
Gold: $1,850 -0.
1%InsightsCrypto carbon credit protocols seem to be improving
.Like everything else related to cryptocurrencies, blockchain-based carbon credit protocols had a rough go of it last quarter. They faced the same market pressures as the rest of the industry, which has been struggling to get back on its feet since the collapse of Terra.
But the sector's challenges aren't just related to market dynamics. The industry is also facing an internal reckoning after questions arose about the quality of credits traded in base carbon tokens (BCTs) issued under the Toucan Protocol.
In April, researchers from Carbon Plan, a California-based climate data nonprofit, published a paper titled "Zombies on the Blockchain," in which they outlined that about 28% of Verified Carbon Units (VCUs) traded in BCTs on the Toucan Protocol and through emissions trading service KlimaDao came from "zombie projects."
"Toucan appears to be creating an entirely new demand for long-neglected credits that have experienced little or no demand in recent years," the researchers wrote. "If the crypto market places a higher value on BCTs and CLIMA tokens, these products may bring formerly stalled offset projects back to life."
CarbonPlan's post highlights that carbon credits under Article 6 of the Paris Agreement prohibit trading of credits from carbon offset projects registered before Jan. 1, 2013. Yet these older projects are actively traded through the Toucan Protocol and were tokenized as recently as November 2021.
"Rather than eliminating supply from the voluntary market, however, zombie projects show that BCTs are creating new supply - not in the form of new projects, but of old credits that previously could not find buyers," CarbonPlan researchers write. "Thanks to demand from blockchain buyers, however, these low-value credits have found new life."
Aside from the issue of "zombie projects," the other problem with these projects is structural. The industry has commoditized so-called "set-aside" credits.
When companies want to offset their emissions, they use this process to buy credits and withdraw them from the market. In return, they receive a receipt that forms the basis for their published carbon offset and BCT tokens.
In an interview with S&P Global, Robin Vix, Verra's chief legal, policy and markets officer, called this entire process a "pipe dream" as the company plans to decouple the Toucan Protocol from the purchase of withdrawn credits.
"Verra will prohibit the creation of instruments or tokens based on retired credits, effective immediately, as the act of retirement is widely understood to consume the environmental benefit of the credit," Verra's statement reads.
Vix told S&P Global that Verra will begin reviewing stakeholder requests for retired carbon credits and blocking anything suspected to be related to tokenization.
"Carbon credits themselves are abstract, intangible things based on counterfactual values of things you can't really see - emissions. And cryptocurrencies are another level of abstraction," Vix said.
None of this is to say, however, that Verra rejects tokenization and carbon credit trading altogether, or that Toucan is unaware of the arrangement's structural flaws.
Verra said it is looking at ways to "immobilize" current - not retired - carbon credits so they can be bridged for trading with Toucan or other exchanges.
"The initial thinking is that it's best if these tokens are somehow tied to live, unexpired credits so that the environmental benefit has not yet been consumed," Rix told S&P Global. "In other words, when you purchase tokens or coins, you always know that the underlying [offset] is there."
In an interview with CoinDesk, Rob Schmitt, one of Toucan's core developers, stressed that Verra is not about blocking tokenization; rather, Verra simply wants to make the process better.
Schmitt said that bridging and trading withdrawn carbon credits is not ideal, but just a first step. Once Verra introduces the ability to immobilize carbon credits, it would mean credits could be sent back both ways from Toucan, creating price parity.
"That will have a very positive impact on the on-chain markets," he said. "
Schmitt is also aware of Carbon Plan's paper on zombies. He points to a paper by Toucan titled "Raising Standards in the On-Chain Carbon Market," which describes the protocol's plan to offer only allowances that are less than 10 years old.
"The obsession about age is not necessarily correct here ... if you took a climate action one year, it's the same action the next year. It's not going to be any different," he said. "The problem with these credits is that it's questionable whether these projects needed carbon credit funding to get off the ground," he said.
"But that's a problem we inherited from Vera. "
Technician's takeBitcoinPares
Earlier Losses; Resistance at $33K
.Bitcoin (BTC) rebounded from a low of around $28,000 at the start of the New York trading day. The cryptocurrency remains in a tight trading range, anchored at $30,000 over the past two weeks.
BTC remained roughly flat over the past 24 hours, falling 2% over the past week.
The Relative Strength Index (RSI) on the daily chart is rising from the oversold zone, but remains below the neutral level of 50. A reading above 50 could indicate a short recovery phase.
Currently, there is strong resistance on the chart, first at $33,000 and then at $35,000, which could stall a price rebound. Momentum on the weekly and monthly charts needs to improve to allow prices to rise.
Most indicators are neutral in the short term and bearish in the long term, meaning upside potential is limited from here.
Key EventsBlockchain&
Sustainable Economic Growth Conference
.World Economic Forum Annual Meeting
18:35 HKT/SGT(11:35 UTC): Speech by Richard Lane, Member of the Executive Board of the European Central BankCoinDeskTVIn
case you missed it, here is the latest episode of "First Mover" on CoinDesk TV
:Ether, DeFi under pressure, former Binance expert on starting a crypto fund amid market downturn
Tastytrade's JJ Kinahan joins "First Mover" to provide his analysis of the crypto markets as investors brace for more pain under pressure from the Fed rate hike. Former Binance executive and co-founder of a new crypto fund Old Fashion Research Ling Zhang explains how the firm plans to drive cryptocurrency adoption in emerging markets. Plus, Chris Blec provides insight into the state of decentralized finance (DeFi) projects following the collapse of LUNA and UST.
HeadlinesAfterArmstrong
's tweet, India's crypto policy body says no contempt of court challenge against RBI: Coinbase's CEO suggested last month that the RBI's "shadow ban" on crypto exchanges violates a Supreme Court ruling.
Former Binance executives launch $100 million fund to boost crypto adoption in emerging markets: Old Fashion Research was founded by Ling Zhang and Wayne Fu, who were previously vice president of M&A and head of corporate development at Binance, respectively.
Christine Lagarde defends massive ECB intervention, says her son trades cryptocurrencies: The ECB president appeared on the Dutch talk show "College Tour" last weekend.
Solana, Dogecoin tokens dip as futures suggest bearish sentiment: Choppy trading in broader markets failed to halt the gradual decline in major cryptocurrencies, some of which have fallen as much as 8% in the past 24 hours.
Circle is calling on the Federal Reserve not to step on its toes by introducing a digital dollar: The public is already well served by private sector tokens, the USDC stablecoin issuer said in a comment to the central bank.
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Said and heard
"Some traditional Internet business models, such as advertising, are likely to persist in the metaverse. However, with blockchain-related technologies such as decentralized identity and zero-knowledge proofs (ZKP), privacy can actually be preserved in the metaverse if we construct the foundations correctly. Nonetheless, using these types of privacy and identity technologies, especially ZKPs, can come with the added hurdle of worse latency, [because] zero-knowledge proof itself can be computationally intensive to execute." (CoinDesk columnist Daniel Kuhn) ... "But even when confronted with dogma or disbelief, innovation is rarely slowed. The truth comes to light. And so it will with the Metaverse, the latest technology that was declared dead on arrival." (WeMeta co-founder Winston Robson, for CoinDesk) ... "International trade has undoubtedly brought great prosperity, but we must recognize that our economic decisions have consequences for our security," the former Norwegian prime minister told event attendees ... Freedom is more important than free trade. Protecting our values is more important than profit." (Secretary General Jens Stoltenberg at the World Economic Forum)