Bitcoin settles above $27.1K after dip due to rate hike and inflation concerns.

Good morning. Here’s what’s happening:

Prices: Bitcoin settled above $27.1K after Cleveland’s Federal Reserve Bank president spooked investors with hawkish comments and China reported dispiriting manufacturing data.

Insights: Before House members approved a bill to raise the debt ceiling, bitcoin whales reduced their holdings and sent assets to exchange.

Prices

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Note: This is an HTML code and cannot be translated to English as it is. It seems to be a news article or report about the prices of Bitcoin, Ethereum, S&P 500, Gold, and Nikkei 225. It also mentions some insights about bitcoin whales reducing their holdings and sending assets to exchange before a bill to raise the debt ceiling was approved by House members. There is also a code for a table with various market indices and their corresponding prices.

CoinDesk Market Index (CMI)
1,178 −23.3 ▼ 1.9%
Bitcoin (BTC)
$27,099 −683.3 ▼ 2.5%
Ethereum (ETH)
$1,874 −32.7 ▼ 1.7%
S&P 500
4,179.83 −25.7 ▼ 0.6%
Gold
$1,980 +15.8 ▲ 0.8%
Nikkei 225
30,887.88 −440.3 ▼ 1.4%
BTC/ETH prices per CoinDesk Indices , as of 7 a.m. ET (11 a.m. UTC)

Bitcoin Sinks Early, Then Holds Above $27.1K

By James Rubin

Hawkish comments by Cleveland’s Federal Reserve Bank president, the increasing likelihood of at least one more interest rate hike by the U.S. central bank and dispiriting Chinese manufacturing data kept crypto investors off-balance on Wednesday.

Bitcoin, the largest cryptocurrency by market capitalization, was trading near $27,100, down more than 2.2% over the previous 24 hours, after spending much of the previous four days comfortably above $27,500. BTC finished May (UTC) with its first losing month of 2023 after soaring by more than 60% over the first four months.

“Bitcoin encountered selling pressure in response to comments made by a prominent Federal Reserve official, indicating a lack of compelling reasons to pause liquidity tightening measures,” Mikkel Morch, chairman and non-executive director at crypto investment fund ARK36, said. “These remarks have had a disruptive impact on various risk assets, including cryptocurrencies.

Morch added: “Simultaneously, the release of discouraging manufacturing data from China has added to the bearish sentiment surrounding bitcoin and other risk assets.”

In an interview with the Financial Times published Wednesday, Fed Cleveland bank President Loretta Mester said that she did not see any reason to cease the Fed’s nearly year-long streak of rate increases, although she was open to changing her mind if the current hot employment market, a characteristic of high inflation periods, and prices cool. “We may have to go further,” she told the Times. “At this point, I don’t really necessarily see a compelling reason that we wouldn’t want to take another small step to counter some of that really embedded, stubborn inflationary pressure.”

Crypto markets have struggled in recent weeks amid uncertainty about the U.S. government’s ability to extend the debt limit and meet its financial obligations, and inflationary concerns. House lawmakers finally passed the bill late Wednesday via a bipartisan effort that overcame strong opposition from far-right Republicans. Meanwhile, the anticipated rebound of the Chinese economy slowed at least temporarily as the official manufacturing purchasing managers index declined to 48.8 in May from 49.2 in April, according to the country’s National Bureau of Statistics said

Ether was recently changing hands at about $1,875, off 1.4% from Tuesday, same time. Other major cryptos spent much of Wednesday in the red with AVAX, the token of the Avalanche base-layer network, and UNI, the native cryptocurrency of the Uniswap decentralized exchange, both recently off more than 2%. The CoinDesk Market Index, a measure of crypto markets performance, was recently down over 2.1%.

Equity markets, including the tech-focused Nasdaq and S&P 500, fell by 0.6% as investors reacted to a strong Job Openings and Labor Turnover (JOLTS) report which showed openings increasing to 10.1 million instead of the expected 9.3 million in April. This broke a three-month streak of declines which had offered hope for those hoping for a dovish turn in monetary policy. Stocks and cryptocurrencies fell together instead of diverging like they have over the past couple of months. Dave Weisberger, the CEO of CoinRoutes, noted that bitcoin holding is at an all-time high, while BTC to be sold on exchanges and volume on exchanges are at low levels, leading him to suggest that we may be in the bottom of a trading range. The article also includes a table of the day’s biggest gainers and losers in the world of cryptocurrency, as well as an analysis of on-chain data showing that large holders of bitcoin reduced their bitcoin holdings in the days leading up to a debt deal.

The most important thing is what happens next. If there is an increase in the supply of bitcoin for large holders after the debt deal, it will indicate that they are renewing their bullish sentiment. If the supply continues to decline, it suggests that they have bigger concerns.

Important events.

London Blockchain Conference

2:00 p.m. HKT/SGT(6:00 UTC) Germany Retail Sales (YoY/April)

8:15 p.m. HKT/SGT(12:15 UTC) United States ADP Employment Change (May)

CoinDesk TV

If you missed it, here’s the latest episode of “First Mover” on CoinDesk TV:

Bitcoin Slips Ahead of Debt Ceiling House Vote; Rep. Davidson on Future of U.S. Crypto Regulation

The vote on the U.S. Debt ceiling deal is coming up, after passing a key test in the House rules committee on Tuesday. Rep. Warren Davidson (R-Ohio) joined “First Mover” to discuss the potential impact of the deal and the outlook for crypto regulation. Plus, CoinRoutes CEO and co-founder Dave Weisberger shared his crypto markets analysis as bitcoin (BTC) recedes near $27,000. And, Astaria CTO Joseph Delong explained the state of NFT lending in 2023.

Headlines

TradFi Giant TP ICAP Brings Crypto Spot Trading to Institutional Investors : The Fusion Digital Assets marketplace opened last week offering trading in bitcoin and ether versus the U.S. dollar.

USDC Issuer Circle Has Ditched All U.S. Treasuries From $24B Reserve Fund Amid Debt Ceiling Showdown : The stablecoin issuer now only holds cash and repurchase agreements to back its USDC stablecoin’s value.

Crypto Bridging Protocol Multichain ‘Unable to Contact’ CEO Zhaojun : Multichain’s team says it cannot maintain some cross-chain bridges without getting access permissions from its AWOL chief.

StepStone VC Raises $97M for Two Blockchain Funds : SEC filings show pooled investment figures for the two private equity funds.

USDT Issuer Tether Ventures Into Payment Processing With Georgia Investment : The stablecoin issuer announced earlier this week it is investing in a sustainable bitcoin mining facility in Uruguay.

Edited by James Rubin.

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