Crypto in a snap
Bitcoin BTCUSD dropped about 7.2% over the past seven days, and was trading at around $19,158 on Thursday, according to CoinDesk data. Ether ETHUSD lost 8.5% over the seven-day stretch to around $1,275. Meme token Dogecoin DOGEUSD traded 11.4% lower while another dog-themed token, Shiba Inu SHIBUSD, was down 13.7% from seven days ago.
Persistent inflation
The U.S. consumer price index rose 0.4% in September. Economists polled by The Wall Street Journal forecasted a 0.3% increase. The yearly inflation rate dipped to 8.2% from 8.3%.
The hotter-than-expected CPI data reinforced the view that the Federal Reserve will continue to raise interest rates aggressively to curb inflation. After the data was released Thursday morning, traders priced in a 97.8% probability that the Federal Reserve will increase its key interest rate by 75 basis points to a range of 3.75% to 4% in its early November meeting, according to the CME FedWatch tool. The probability was up from 84.5% on Wednesday.
Bitcoin dropped 3% initially to around $18,198 following the CPI data, before it later rebounded to about $19,158.
Bitcoin’s outperformance over stocks
Mark Connors, head of research at 3iQ Digital Asset Management, said he expects equity prices to fall sharply and bitcoin price to “hold much closer to the current level” in the coming months.
Connors expects stocks to slide further, with the equity market lagging behind the bond market. Earlier on Thursday, the 10-year Treasury yield topped 4%. the highest level since 2010.
On the other hand, with increasing institutional adoption and after the June low washed out “weaker hands”, bitcoin might be in a better position, according to Connors.
Over 69% of bitcoin have been held for more than a year, noted Connors. “That means that there are mostly strong hands, all the tourists are gone,” Connors said.
In the third quarter, bitcoin outperformed major U.S. stock indexes, though the correlation between the two assets remained high. The 63-day correlation between bitcoin and Nasdaq recently stands close to its peak at 67%, Connors noted. A correlation of 1.0 means a pair of assets are moving in perfect lockstep, while a correlation of zero means there is no relationship between price moves.
Still, bitcoin went up 4% from July to September, according to CoinDesk data. In contrast, the Dow Jones Industrial Average fell 7% during the same period, according to Dow Jones market data. The S&P 500 lost 5% in the third quarter and the Nasdaq Composite went down 4%.
“You had correlation not speaking to returns,” noted Connors. It may be partly due to bitcoin’s positively skewed return distribution, where investors may face frequent small losses and a few large gains. The correlation’s linear calculation may have failed to capture such return character, according to Connors.
BNY Mellon starts crypto custody service
Bank of New York Mellon, the world’s largest custodian bank, said it would start storing clients’ crypto assets as of Tuesday, despite the price mayhem of digital assets.
The service allows certain clients to hold and transfer bitcoin and ether through BNY Mellon, the lender said in a statement Tuesday. The addition makes BNY Mellon the largest U.S. bank to offer safekeeping of both crypto and traditional assets.
Though bitcoin has lost almost 60% of its value year-to-date, “we continue to see significant demand from institutional investors and are excited about future opportunities from blockchain and tokenization technology for assets and cash,” Caroline Butler, chief executive of custody services at BNY Mellon, wrote to MarketWatch in an email.
The move could boost institutional adoption for digital assets, as BNY Mellon, with $43 trillion assets under custody as of June, has existing relationships with many financial heavyweights. I’ve written more about it here.
Google partners with Coinbase
Google said Tuesday that it has partnered with Coinbase to start allowing some users pay for its cloud services using certain cryptocurrencies, according to a statement. The service will be rolled out in early 2023, CNBC reported.
Meanwhile, Coinbase will build its global data platform on Google Cloud and use the latter’s compute platform to process blockchain data at scale, according to the statement.
SEC probes NFT creator
The U.S. Securities and Exchange Commission is investigating Yuga Labs Inc., creator of the Bored Ape Yacht Club non-fungible tokens, or NFTs, over whether its sales of digital assets violated security laws, Bloomberg reported Tuesday.
The regulator is examining whether certain NFT Yuga Labs issued are securities and should follow the corresponding disclosure rules, according to the Bloomberg article citing a person familiar with the matter. Read more here.
Crypto companies, funds
Shares of Coinbase Global Inc. COIN dipped 1% to $69.24 on Thursday, and were down 5.9% over the past five trading sessions. Michael Saylor’s MicroStrategy Inc. MSTR shares gained 1.9% Thursday to $222.46, while they are down 8% over the past five days.
Mining company Riot Blockchain Inc. RIOT shares advanced 4.2% to $6.40 Thursday, and they were down 10.7% over the past five days. Shares of Marathon Digital Holdings Inc. MARA advanced 6.9% to $11.14, while down 18% over the past five days. Another miner, Ebang International Holdings Inc. EBON skid 1.8% to $0.37 on Thursday, while down 6.7% over the past five days.
Overstock.com Inc. OSTK’s shares rose 0.6% to $26.53. The shares traded 0.6% higher over the five-session period.
Shares of Block Inc. SQ, formerly known as Square, added 0.4% to $56.37 and were up 9% for the week. Tesla Inc. TSLA shares increased 1.9% to 221.37, down 7.2% over the past five days.
PayPal Holdings Inc. PYPL edged up 0.7% to $84.37, with a 10.7% loss over the five-session stretch. Nvidia Corp. NVDA shares went up 4% to $119.60, looking at a 8.6% loss for the past week.
Advanced Micro Devices Inc. AMD shares picked up 2.4% to $59.26 on Thursday, down 12.7% from five trading days ago.
Among crypto funds, ProShares Bitcoin Strategy ETF BITO were up 1.6% to $11.96 Thursday, while its Short Bitcoin Strategy ETF BITI slipped 1.6% to $38.23. Valkyrie Bitcoin Strategy ETF BTF climbed 1.7 to $7.49, while VanEck Bitcoin Strategy ETF XBTF hiked 1.4% to $18.95.
Grayscale Bitcoin Trust GBTC gained 1.5% to $11.38.