Good morning. Here’s what’s happening:
Market moves: Bitcoin led a broad crypto recovery ahead of the U.S. CPI release.
Technician’s take: Buyers started to return to the market, although the upside seemed limited to the $45,000 level.
Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis.
Ether (ETH): $3,240 +5.2%
S&P 500: $4,713 +0.9%
DJIA: $36,252 +0.5%
Nasdaq: $15,153 +1.4%
Gold: $1,821 +1.1%
Bitcoin went up as high as $43,106 on Tuesday, leading a broad market recovery in crypto. The move came after the stock market in the U.S. halted its five-day rout ahead of the Consumer Price Index (CPI) data release on Wednesday.
At the time of publication, the most valued cryptocurrency was changing hands above $42,800, up over 2% in the past 24 hours, according to CoinDesk data.
Bloomberg reported the stock market climbed on Tuesday after Jerome Powell, the chair of the Federal Reserve, reassured investors the Fed will combat the current high inflation, signaling the central bank may reduce its balance sheet this year.
A key event to watch on Wednesday is the release of December’s U.S. consumer price index (CPI). Economists anticipate a 0.5% month-to-month increase in CPI to 7.1%.
In the past two months, bitcoin’s price experienced high volatility after the CPI data release. While some crypto traders and investors view bitcoin as a hedge against inflation, others consider it as a risk asset like stocks, which react to tightened monetary policy resulting from high inflation.
Most other major cryptocurrencies also rose on Tuesday. Ether, the second-biggest cryptocurrency by market capitalization, was up over 5% to above $3,200, at the time of publication. Layer 1 token NEAR remained the biggest winner. It is up nearly 13% over the past week despite the crypto sell-off.
Bitcoin (BTC) went trading above the $40,000 support level and was up about 3% over the past 24 hours from 9 p.m. UTC. Buyers are starting to return to the market, although the upside appeared to be limited to the $45,000 resistance level, which is also near the 200-day moving average.
On intraday charts, upside momentum is improving, which suggests buyers could remain active into the Asia trading day.
BTC is the most oversold since Dec. 10, according to the relative strength index (RSI) on the daily chart. Typically, oversold readings precede price recoveries, similar to what occurred in late September. This time, however, price reaction to the RSI and other indicators have been delayed.
Still, on the weekly chart, the RSI is not yet oversold, which decreases the chance of significant buying pressure.
Australia Housing Industry Association new home sales (MoM Dec.)
8 a.m. HGT/SGT (12 a.m. UTC): Australia and New Zealand commodity price (Dec.)
9 a.m. HGT/SGT (1 a.m. UTC): Bank of Japan Governor Haruhiko Kuroda press conference about monetary policies
9:30 a.m. HGT/SGT (1:30 a.m. UTC) China consumer price index (Dec. MoM/YoY)
9:30 p.m. HGT/SGT (1:30 p.m. UTC) U.S. consumer price index (Dec. MoM/YoY)
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Said and heard
“We mustn’t become exploited by the metaverse. Rather, it should serve us. For that to happen, it needs a constitution.” (Binomial co-founders and tech entrepreneurs Stephanie Hurlburt and Rich Geldreich for CoinDesk) … ”Yet, even multinational companies have a boss: the public. Apple’s privacy push and Facebook’s rebrand show that no matter the size of the company, public opinion reigns supreme. If the public displays enough appetite for a metaverse constitution, Big Tech’s hands will be tied.” (Hurlburt and Geldreich for CoinDesk) … “If we see inflation persisting at high levels longer than expected, if we have to raise interest rates more over time, we will. We will use our tools to get inflation back.” (Jerome Powell testifying before Senate Banking Committee) … “The Fed needs to take seriously the systemic risks that threaten our economic progress, like cryptocurrencies and stablecoins and most importantly, climate change.” (Ohio Sen. Sherrod Brown at Powell hearing) … “But the most important factor is automation. And automation-fueled inequality is “not an act of God or nature,” he added. “It’s the result of choices corporations and we as a society have made about how to use technology.” (MIT economist Daron Acemoglu in The New York Times)…”DeSo (which formerly operated as BitClout) is in principle an exemplar of what Web 3 could become. The system is built around token economics intended to help content creators get paid for their work, and users to manage their DeSo assets using digital wallets analogous to MetaMask or Samourai.” (CoinDesk columnist David Morris)