First Mover Asia: Expect Bitcoin to Hit $25.2K Soon: Strategist

Good morning. Here’s what’s happening:

Prices: Fairlead Strategies' Katie Stockton anticipates a pullback to around $25,200 for bitcoin and a short-term setback for Ether, but sees potential for Ether to outperform Bitcoin in the short term.

Insights: Bitcoin needs a good story before it can push higher, says Brent Xu, CEO of Web3 bond-market platform Umee. What will that narrative be?

Prices

CoinDesk Market Index (CMI) 1,209.53 +0.9 ▲ 0.1% Bitcoin (BTC) $27,618 +36.0 ▲ 0.1% Ethereum (ETH) $1,838 −6.9 ▼ 0.4% S&P 500 daily close 4,137.64 +18.5 ▲ 0.4% Gold $2,037 +0.3 ▲ 0.0% Treasury Yield 10 Years 3.44% ▼ 0.1 BTC/ETH prices per CoinDesk Indices; gold is COMEX spot price. Prices as of about 4 p.m. ETCoinDesk Market Index (CMI) 1,209.53 +0.9 ▲ 0.1% Bitcoin (BTC) $27,618 +36.0 ▲ 0.1% Ethereum (ETH) $1,838 −6.9 ▼ 0.4% S&P 500 daily close 4,137.64 +18.5 ▲ 0.4% Gold $2,037 +0.3 ▲ 0.0% Treasury Yield 10 Years 3.44% ▼ 0.1 BTC/ETH prices per CoinDesk Indices; gold is COMEX spot price. Prices as of about 4 p.m. ET

All Eyes on Ether as Bitcoin Pushes Down?

Good Morning Asia,

Crypto is starting the trading day in Asia fairly flat after a promising U.S. Consumer Price Index pushed bitcoin above $28,000.

Bitcoin is now trading at $27,618, according to CoinDesk market data, which makes it effectively flat. Ether is down 0.4% to $1,838.

Katie Stockton, Founder and Managing Partner of Fairlead Strategies, said during a recent appearance on CoinDesk TV that overall the crypto market likes the lower CPI numbers but don’t expect price appreciation yet.

“From a technical perspective, the market does seem to like it, we're seeing a positive reaction. But really, the action is somewhat insignificant in terms of where both bitcoin and Ether have traded up late,” she said. “They recently broke down below their 50-day moving averages."

Stockton expects Bitcoin to pull back to its base breakout point of about $25,200. However, she still sees an upward trend in the intermediate term.

This lower price point should serve as a nice entry point for new investors, she argues.

Stockton also sees a short-term setback for Ether as it too, has moved out its 50-day moving average. However, she predicts Ether might outperform bitcoin in the short term.

"We anticipate a downside for Ether, regardless of today's activity, with a support level around $1,755,” she said. “This could provide a natural point for stabilization as oversold conditions may yield a rebound."

Biggest Gainers

Asset Ticker Returns DACS Sector Gala GALA +11.5% Entertainment Cosmos ATOM +5.5% Smart Contract Platform Polkadot DOT +2.8% Smart Contract Platform

Biggest Losers

Asset Ticker Returns DACS Sector Ethereum ETH −0.3% Smart Contract Platform

Insights

An Asset Market in Search of a Good Story

Banking substitute? Inflation hedge? Gold alternative?

Bitcoin has yet to find a new foundation that drives the price from its weeks-long range roughly between $25,000 and $30,000, Brent Xu, CEO and co-founder of Web3 bond-market platform Umee, said on CoinDesk TV’s “All About Bitcoin” program.

“Bitcoin is trying to find its next narrative,” Xu said.

Bitcoin’s price seesawing on Wednesday encapsulated its vulnerability to events in recent weeks. The largest cryptocurrency by market capitalization rose on a mildly favorable Consumer Price Index (CPI) that showed inflation rising a less-than-expected 4.9% in April. But BTC sank around midday on internet rumors of a $320 million U.S. government bitcoin sell-off before rebounding as markets shrugged off the hearsay.

Xu noted that the price run-ups tied to a mini-run of U.S. bank failures in April and earlier this month had failed to spur long-lasting price momentum.

“We saw a bunch of banks get destroyed, and there's this narrative building that bitcoin will be a new banking system,” he said. “Unfortunately, that narrative is still not fully substantiated.Bitcoin is oscillating during the existing market cycles, and we haven't reached that bullish momentum cycle yet.

He added: That is likely to happen next year. For the rest of this year, we're gonna see some more price oscillation.”

Xu believes that the steady decline in inflation from a peak of 9.1% last June will allow the U.S. central bank to reconsider the steady diet of hawkish interest rate increases that Federal Reserve critics blame for the near banking meltdown and other economic ills. “There's a likelihood that we're going to see some potential cuts,” Xu said, adding that some analysts foresee interest rate cuts totaling 75 basis points (bps) in the months ahead.

“They need to take a long hard look at what all these interest rates hikes have been doing, and just the possibility of a deeper recession into the near future,” he said.

Xu said that liquidity would be important for crypto markets to thrive. Market makers Jane Street and Jump Crypto recently abandoned crypto trading in the U.S. and other firms focused or with at least a deep interest in crypto have also been scaling back their activities or threatening to move them overseas.

But Xu said that “these markets will find a way to exist, if not within U.S. borders,” and added that “there will be institutional liquidity that comes in.”

“It’s just building the right narrative. The next narrative needs to be a major innovation, like the Shanghai Shapella upgrade, or some sort of new L-2 (layer 2), or some major improvement to the bitcoin blockchain. And when we see those, we'll see more liquidity and action coming (into markets).”

Important events.

9:30 a.m. HKT/SGT(1:30 UTC) Chinese Consumer Price Index (YoY/April)

7:00 p.m. HKT/SGT(11:00 UTC) Bank of England Monetary Policy Report

8:30 p.m. HKT/SGT(12:30 UTC) United States Producer Price Index ex Food & Energy (YoY/April)

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

Bitcoin Inches Higher After April Inflation Report; Congress's Joint Crypto Regulation Hearing

Bitcoin (BTC) was inching higher after the annual U.S. inflation rate slowed to 4.9% in April from 5.0% in March, versus economist forecasts for 5.0%, according to the Bureau of Labor Statistics. Fairlead Strategies Founder and Managing Partner Katie Stockton shared her crypto markets analysis. Asobitcoin President Will Hernandez also joined "First Mover" to give an update on El Salvador's bitcoin experiment. And Fan-Owned Sail Team LLC Founder David Palmer shared his thoughts on creating a successful SailGP team with a passionate fan and owner base.

Headlines

Aragon’s ANT Rallies After Cofounder Proposes Token Buybacks to End Activist Crisis: After a week of bickering cooler heads began to prevail. The market responded with gusto.

Crypto Derivatives Market Share Hits All-Time High: Binance continues to be the dominant crypto derivatives trading platform.

Uniswap Weighs Proposal to Enrich Token Holders, Switch on Liquidity Pool Fees: The plan to turn on fees for some of Uniswap’s liquidity pools would funnel money to the protocol’s treasury and token holders.

Urbit, a Network Older and Weirder Than Bitcoin, Finally Turns Toward Growth: The peer-to-peer network started in 2002 says it's taking on "MEGACORP," much in the same vein as many blockchain networks. A bit more fun are the "secret code names" that users are assigned.

Bitcoin Liquidity on the Brink as Market Makers Pare Back in Crypto Markets: Liquidity across bitcoin trading pairs has slumped and failed to recover since the collapse of FTX in November.