1. Market Wrap: Bitcoin Holds Above $60K After Fed Taper Announcement
Analysts see further upside despite lower trading volume.
Bitcoin traded in a choppy price range on Wednesday as traders reacted to the U.S. Federal Reserve’s plans to taper its $120-billion-a-month in bond purchases.
The unprecedented amount of buying by the Fed as part of its monetary stimulus plan known as quantitative easing (QE) provided a tailwind for financial assets, such as cryptocurrencies, deemed by the market to be risky. But lower liquidity as a result of the tapering could encourage investors to reduce their exposure to crypto and other risks.
Bitcoin’s price fell by about 5% during the announcement by the Fed’s policymaking Federal Open Market Committee in its post-meeting statement, but buyers were quick to step in around the $60,000 support level.
Analysts remain bullish on cryptocurrencies, but some have pointed to declining trading volume as a sign of slowing upside momentum in prices.
“We haven’t even seen an episode of FOMO (fear of missing out) yet, so the sharpest bull-run part of the rally is yet to come,” Alex Kuptsikevich, an analyst at FxPro told. “Despite BTC’s very sluggish performance in recent days, what still draws attention is the apparent support on dips,” Kuptsikevich wrote.
Latest Prices
Bitcoin (BTC): $62,997.19, -0.64%
Ether (ETH): 4,630.40, +2.78%
S&P 500: 4,660.57, +0.65%
Gold: 1,772.56, -0.83%
10-year Treasury yield closed at 1.596%
Bitcoin rally on low trading volume
Trading volume in the bitcoin spot market continued to decline despite bitcoin’s price rally over the past month. The chart below shows the seven-day average BTC trading volume, which is down almost $1 billion from the previous week, according to data compiled by Arcane Research.
But some analysts expect higher trading activity if BTC rallies through the end of the year.
“The trading volume has decreased substantially since bitcoin hit an all-time high on October 20, and it should increase considerably if bitcoin is to challenge its all-time high again soon,” Arcane wrote in a Wednesday report.
2. Coinbase Users Can Borrow Up to $1M With Bitcoin as Collateral
The crypto exchange’s customers can obtain cash via their PayPal or bank accounts.
Cryptocurrency exchange Coinbase is now allowing customers to borrow as much as 40% of their bitcoin value up to $1 million with no credit checks, the company tweeted on Tuesday.
The borrowing minimum and maximum amounts may vary by state, Coinbase added.
The loans will be issued with an annual percentage rate of 8%, and borrowers won’t be required to show credit checks, Coinbase said.
Customers can obtain the cash using their PayPal or bank accounts. They will need to make minimum $10 monthly interest payments, and Coinbase is offering flexible repayment schedules.
Coinbase said that it won’t lend or otherwise use the collateralized bitcoin but instead continue to hold it.
Earlier this year, Coinbase dropped plans for a crypto lending product after the U.S. Securities and Exchange Commission raised concerns. The lending product was supposed to power a crypto savings account that would earn customers a 4% annual percentage yield (APY), a return that’s multiples higher than most savings accounts at traditional banks.
3. Crypto Exchange Kraken Fails to List SHIB, Despite Promise
The San Francisco-based exchange may have underestimated the power of SHIBArmy.
Crypto exchange Kraken has failed to fulfill a promise it made on Twitter to list popular meme token shiba inu (SHIB) once the idea had received enough “likes,” upsetting its large community of supporters.
The San Francisco-based crypto exchange tweeted on Monday that Brian Hoffman, its crypto platform product lead, said Kraken would list shiba inu on Tuesday if the tweet received 2,000 “likes.” At press time, the tweet had received more than 77,000 “likes.”
However, as of Wednesday, SHIB is still not available to buy and sell on Kraken, and in a follow-up tweet, the exchange wrote that while they’ve heard SHIB’s supporters “loud and clear,” there is “more work” for them to do as they move through their listing review process. Kraken did not further clarify when or if it would list SHIB.
When reached for comment, Kraken said it had nothing to add beyond what it had already tweeted.
The event has triggered plenty of anger on social media, with Twitter user @Rogersnith10 tweeting: “Don’t tweet false promises in future it really doesn’t give any investors confidence in your platform, you have lost me as lifetime customer now.” The tweet has received almost 1,400 “likes.”
While SHIB’s trading volume is mostly concentrated on decentralized finance (DeFi) trading, it has been extremely popular among retail investors on major centralized exchanges. At the time of writing, Binance, Coinbase and OKEx are the top three exchanges with the most SHIB trading volume, according to CoinGecko.
SHIB was recently changing hands at $0.00006433, down 6.5% in the past 24 hours.
4. Federal Reserve to Taper Money Printing That Fueled Bitcoin Bets
The $120 billion of monthly bond purchases has provided a tailwind for bitcoin as investors see the cryptocurrency as a hedge against dollar debasement in the face of ultra-loose monetary policies.
The U.S. Federal Reserve announced plans to taper its $120-billion-a-month in bond purchases, taking the first step toward winding down a post-coronavirus money-printing program that has inspired many investors to buy bitcoin as a hedge against inflation.
The Fed said Wednesday in a statement that it will reduce the pace of asset purchases by $15 billion a month starting this month. Purchases of U.S. Treasurys will drop to $70 billion a month from $80 billion, while purchases of government-backed mortgage securities will decline to $35 billion a month from $40 billion.
Under the plan, the Fed will continue to wind down its purchases by $15 billion every month until the program concludes during the middle of next year.
“The committee judges that similar reductions in the pace of net asset purchases will likely be appropriate each month, but it is prepared to adjust the pace of purchases if warranted by changes in the economic outlook,” the Fed’s monetary policy committee, known as the Federal Open Market Committee, or FOMC, said in the statement.
The asset purchases — a form of stimulus funded by newly created money, known as “quantitative easing,” or QE — have helped to more than double the size of the Fed’s balance sheet since March 2020, to about $8.6 trillion as of last week.
5. Binance Funds $116M Initiative to Grow French Crypto Ecosystem
The world’s biggest crypto exchange has teamed with nonprofit French Fintech to build a research hub and accelerator.
Crypto exchange Binance and French Fintech, a nonprofit focused on promoting financial technology in France, have launched an initiative to support the development of the French and European blockchain and cryptocurrency ecosystem.
As part of the initiative, called “Objective Moon,” Binance will provide €100 million ($116 million) to establish a research and development hub in France that will recruit talent from across Europe.
The money will also create a decentralized ledger technology (DLT) accelerator to help fuel startup growth and build out the ecosystem in France and Europe.
Lastly, an online education program aims to develop crypto and blockchain talent in the region. French Fintech and Binance have teamed with crypto security and infrastructure company Ledger on the program.
“At Binance, we recognize the quality of French and European tech, crypto and blockchain talent, and we are convinced that with the launch of Binance’s major operations and investment in France, we can significantly contribute toward making France and Europe the leading global player in blockchain and crypto industry,” said Changpeng “CZ” Zhao, founder and CEO of Binance, in the press release.
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November 4, 2021
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