Good morning. Here's what happened:
Prices: Bitcoin and other cryptocurrencies are plummeting.
Insights: will Gucci's entry into the crypto world last?
Technician's take: BTC is in danger of falling below a short-term uptrend.
PricesBitcoin
(BTC): $36,515 -7.9%
.Ether (ETH): $2,747 -6.5%
Biggest winners
There are no winners today in CoinDesk 20.Biggest losers
| Asset | Ticker | Income | DACS Sector |
|---|---|---|---|
| Cardano | ADA | -11.5% | Smart contracts platform |
| Polkadot | DOT | -10.9% | Platform for smart contracts |
| Algorand | ALGO | -10.8% | Platform for smart contracts |
A tough day for cryptocurrencies
Bitcoin crashed. Stocks swooned.
Wednesday's rally seemed like a distant memory as investors faced the cold reality of higher interest rates and a global economy shaken to its core.
The largest cryptocurrency by market capitalization fell as much as 10% to drop below $36,000, its lowest level since January. Bitcoin last traded just above $36,500, losing about 8% in the last 24 hours. Ether, the second largest cryptocurrency, traded at around $2,750, its lowest level since March and down 6.5% from the previous day.
Other major altcoins fell sharply a day after a relief rally that followed the Federal Reserve's long-awaited announcement of a half-point interest rate hike, with ADA, AVAX and AXS falling 10%, 11% and 12%, respectively, at one point.
On Wednesday, investors had rushed into cryptocurrencies and other riskier assets after Federal Reserve Chairman Jerome Powell highlighted the strength of the U.S. economy and said that the Fed would not consider a three-quarter point rate hike at its next meeting. Powell's comments reassured investors who had feared that the Fed's recent aggressiveness would plunge the U.S. economy into recession. Those fears returned with full force Thursday as businesses weighed the impact of rising prices on consumer spending, which has fueled economic growth.
Stock markets were hit hard, with the tech-heavy Nasdaq plunging more than 1,000 points, its worst performance since 2020. The S&P 500 and Dow Jones Industrial Average each fell more than 3%. Even gold, a usual comfort zone for risk-averse investors, fell nearly a percentage point.
"There was a complete loss of confidence on Wall Street," Oanda Americas Senior Market Analyst Edward Moya told CoinDesk. "Yesterday's risk-on rally that sent stocks, cryptocurrencies and all risky assets higher as investors begin to have doubts about the global economic recovery. There's a big low-risk moment that's sending cryptos sharply lower."
Moya said Powell may have overdone it when he touted the Fed's unwillingness to raise rates in larger increments. "He has shown the markets that he may not be ready to fully address inflation," Moya said, adding that bitcoin support at $33,000 will be crucial and that volatility similar to the last two days is likely to repeat itself.
"We should not be surprised if we continue to see this kind of fluctuation in the coming days," Moya said.
MarketsS&P500
: 4,146 -3.5%
DJIA: 32,997 -3.1%
Nasdaq: 12,317 -4.9%
Gold: $1,877 -0.8%InsightsWill
Gucci's latest crypto initiative work?
Gucci has announced that it plans to accept cryptocurrencies in some stores in the US. The question is, how long will this venture last?
In the case of Tesla (TSLA), it took a little over three months before the company decided to stop offering payments, citing environmental concerns. The reality, however, is that few people - if any - have purchased a Tesla with Bitcoin because of the taxes involved in liquidating Bitcoins and the administrative burden of the new anti-money laundering forms required for any purchase of goods worth more than $10,000.
It is not surprising, then, that the bulk of retail payment volume for merchants is made up of cheaper goods. BitPay, which operates one of the larger crypto merchant services, reports that the majority of its revenue comes from transactions involving prepaid or gift cards, Internet services, virtual private networks, or games. The company says it records about 70,000 transactions per month and has handled $5 billion worth of transactions since it was founded ten years ago. That may seem like a lot, but it's not much when you consider that the Binance crypto exchange handles $18 billion in transactions every day.
For a while, the real estate market in Thailand was one of the few successful high-value industries that accepted cryptocurrencies as payment. Most new construction projects targeted foreign nationals, and developers saw it as a way to attract the newly wealthy crypto-citizens who wanted their own piece of the "Land of Smiles."
But Thai authorities did not agree with this arrangement. Thailand may have a reputation as a place to hide your money from the law, but local authorities have been working hard to update anti-money laundering laws and remove the country from the U.S. State Department's list of countries of particular concern for money laundering.
The real estate sector has always been a popular target for money laundering, and Thai police have targeted some prominent names. When the Securities and Exchange Commission of Thailand banned cryptocurrencies as a form of payment in March, it undoubtedly had this in mind.
Luxury goods like Gucci products are an even easier way to launder money than real estate. The Gucci brand is widely popular, and its goods are in demand worldwide, creating a liquid market. Criminals have long used luxury goods as a way to funnel dirty money back into the banking system, as these goods are relatively easy to buy and resell without losing their value.
So anyone who buys more than $10,000 worth of goods from Gucci must fill out a report on the purchase. Gucci's compliance and risk analysis teams could set an even lower threshold for crypto transactions due to money laundering concerns. This would undoubtedly create a friction point for consumers, and the more of them there are, the less attractive a payment method becomes.
Let's see how long Gucci's crypto payment option lasts. Unlike Tesla, the company doesn't have a strong ESG (environmental, governance and social) mandate, and maintaining crypto merchant services doesn't require a lot of overhead. But how many people will actually make a transaction?
Technicians' opinionBitcoin drops
below $38K, support at $30K-$32K
.Bitcoin could break below a series of higher price lows that have formed a trend since Jan. 24, leading to further downside toward the support zone between $30,000 and $32,000.
However, a daily close above $37,500 could signal short-term stabilization. For now, despite the intraday price fluctuations, the uptrend appears to be limited, as evidenced by the weakening momentum on the daily, weekly, and monthly charts.
The slope of the 100-day moving average has flattened in recent months, indicating weakness in the recovery phase since the January 24 price low at $32,900. Immediate resistance is seen at $40,000, which could limit buying activity in the near term.
In addition, selling volume is not as extreme compared to previous downtrends. This suggests that another downtrend is likely before sellers capitulate.
The 20-day moving average of BTC trading volume, based on Coinbase exchange data provided by TradingView, declined from February to April, reflecting weak buying pressure within the $35,000 to $46,000 price range.
The increase in volume since late April, while negligible, should be watched for signs of increased selling pressure, which could signal a brief price low of around $30,000.
Key EventsBureauof
Labor Statistics Job Report
9:30 a.m. HKT/SGT(1:30 a.m. UTC):Reserve Bank of Australia Monetary Policy Statement.
9:15am HKT/SGT(1:15am UTC):Speech by John Williams, President of the Federal Reserve Bank of New YorkCoinDeskTVIn
case you missed it, here is the latest episode of "First Mover" on CoinDesk TV
:Warren Buffett's granddaughter, an NFT artist, reacts to his crypto comments, market outlook after Fed decision
NFT artist Nicole Buffett spoke on "First Mover" about her projects. How would she explain them to her grandfather, crypto-cynic Warren Buffett? Also, Ben Emons of Medley Global Advisors provided crypto market analysis, and Michael Morisy of MuckRock spoke about the future of document storage. Media content preservation has begun, but how does it work?
HeadlinesIndia parliamentary
finance panel 'rebukes' crypto industry in meeting: sources:The meeting was held in India's IT capital Bengaluru and was the second time the finance committee has met with crypto industry representatives
.Binance, Sequoia among investors backing Musk's acquisition of Twitter: The crypto exchange is providing $500 million to fund the deal.
Solana Pay adds custom transaction requests for merchants: pay previously only allowed one-way transfers of Solana-backed assets between users.
Lindsey McInerney: The Metaverse and the 'DIC Punch': on building NFT's Stoner Cats and Gimmicks franchises. McInerney is one of the speakers at CoinDesk's Consensus Festival in June.
Longer ReadingMattTaibbi
, PayPals Deplatforming and the Case for Crypto: The famous magazine writer has written a story about financial censorship in old media. Oh, how deep the story goes.
Today's crypto explainer: how to spend your cryptocurrency with Bitrefill's gift card platform
Other Voices: Newsom wants to regulate crypto industry in CaliforniaSaidand
Heard
"Crypto isn't a necessary tool for many people who use it, but often a way to signal a lifestyle or alignment with a particular movement or set of ideas. Crypto users are often conspicuous consumers - sometimes due to the fact that blockchains are public records - and often more concerned with using the right app or coin." (CoinDesk columnist Daniel Kuhn) ... "What appeals most to my grandfather about NFTs is that they give artists a chance to share their work, make a living off their work, and express themselves," she said. "If there's anything that opens him up to the world of NFTs and cryptocurrencies, that's it." (Artist Nicole Buffett on CoinDesk TV) ... "'The market yesterday was a relief rally,' said Seema Shah, chief strategist at Principal Global Investors. On Thursday, she said, the realities of a tougher environment for stocks began to take hold, including higher interest rates, difficult earnings comparisons and a stronger U.S. dollar weighing on multinationals' overseas profits." (The Wall Street Journal)