Market Wrap: Cryptocurrencies Stabilize as Traders Await the Fed
Bitcoin traded in a tight range around $46,000 on Tuesday. Some traders prefer to remain on the sideline until the U.S. Federal Reserve concludes its two-day monetary policy meeting on Wednesday, which could be a source of market volatility.
Despite relative calm in crypto markets, equities traded lower as the CBOE Volatility Index (VIX) remained elevated around the 20 level. It appears that investors are in no rush to increase their risk exposure ahead of any Fed announcement out of the meeting.
Also, economic headwinds continue to linger. “The failure of inflation to recede as anticipated will put central banks in a more aggressive tightening stance, causing a sharply negative reaction in financial markets and most likely a significant economic recession,” Deutsche Bank warned in a Tuesday report.
In crypto, there are also signs of caution. “In the last week, the stablecoin dominance also increased by 0.64%, indicating a flight to safety in the crypto markets,” Arcane Research wrote in a report.
Bitcoin (BTC): $47,854, +2.61%
Ether (ETH): $3,838, +2.09%
S&P 500: $4,634, -0.75%
Gold: $1,771, -0.80%
10-year Treasury yield closed at 1.43%
Bitcoin ahead of the pack
Bitcoin is starting to outperform the CoinDesk 20 index, which filters some of the largest cryptocurrencies by market capitalization. Altcoins have continued to struggle after the sell-off earlier this month, which could reflect a lower appetite for risk among investors.
Still, there has been one bright spot in the CoinDesk 20 this month. Polygon’s MATIC token has outperformed its peers since the crypto exchange-traded product (ETP) issuer 21Shares announced it was listing a product linked to the cryptocurrency’s performance on Euronext exchanges in Paris and Amsterdam.
Month-to-date crypto returns (CoinDesk Indices)
DOGE surges: Dogecoin surged as much as 33% after Tesla CEO Elon Musk said the electric-car maker would accept it as payment for merchandise. “Tesla will make some merch buyable with Doge & see how it goes,” Musk tweeted.
L.O.L Surprise! In-store NFT collection: MGA Entertainment is launching a non-fungible token (NFT) collection that accompanies in-store purchases of its L.O.L. Surprise! brand trading cards, the company announced Tuesday. The release is in partnership with Ioconic, an NFT company the toy brand inked a deal with in October, CoinDesk’s Eli Tan reported.
Higher ETH volume on Coinbase exchange: “ETH leads the charge over this past week at a healthy 22.32% of exchange volumes – with lots of interest and flows from users given the breakout in the ETH/BTC pair and ETH’s general outperformance as of late,” Coinbase wrote in a newsletter to institutional clients.
Most digital assets in the CoinDesk 20 ended the day higher.
Notable winners as of 21:00 UTC (4:00 p.m. ET):
Dogecoin (DOGE): +18.79%
EOS (EOS): +9.27%
Stellar (XLM): +5.67%
Polkadot (DOT): -0.16%