Bitcoin climbed above $44,000 for the first time in a week as the most U.S. inflation in four decades revives the debate about whether the cryptocurrency is a hedge against rising consumer prices. The largest digital asset by market value rose as much as 3.3% to $44,085 Wednesday, following the release of the consumer price index, which climbed 7% in 2021. That means inflation in the U.S. registered its biggest annual gain since 1982. Some market participants had speculated that the increase would be higher, helping to send other so-called risk assets such as stock higher. “Inflation today was in line and maybe the Fed doesn’t need to accelerate its tightening, which means that the outlook for cryptocurrencies may be at the margin just a little bit better,” said Michael Reynolds, vice president of investment strategy at Glenmede. “As it becomes, on a relative basis, more attractive to hold assets in cash as the Fed raises rates, we would expect that it may take some of the wind out of the sales of the crypto assets.” Crypto proponents have long argued that Bitcoin and other digital assets, on account of their being an idiosyncratic asset class, could act as hedges against swings in other areas of the financial market. Only 21 million Bitcoin will be put into circulation under the computer protocol that governs issuance, though that figure isn’t expected to be reached for several decades. Other cryptocurrencies also rose on Wednesday following the data release. Ether was up 4.5% to $3,375 […]

Bitcoin dipped below $40,000 for the first time since September, putting it on pace for its worst start to a year since the earliest days of the digital alternative to money. The original cryptocurrency fell a much as 6% to $39,774 in New York trading, bringing its loss this year to about 14%. The decline is the largest for a start of the year since at least 2012. Ether edged lower, while the Bloomberg Galaxy Crypto Index dropped for a fourth day. “Cryptocurrencies are likely to remain under pressure as the Fed reduces its liquidity injections,” said Jay Hatfield, chief executive of Infrastructure Capital Advisors. “Bitcoin could end 2022 below $20,000.” Bitcoin was created in the wake of the 2008 global financial crisis by an anonymous individual or group that went by Satoshi Nakamoto. It first began trading in 2009 and pricing information from during the early days is limited. Bloomberg Intelligence’s Mike McGlone said $40,000 is an important technical support level for the digital token. Cryptocurrencies are a good barometer for the current reduction in risk appetite. But he projects that Bitcoin will eventually come out ahead as the world increasingly goes digital and the coin becomes the benchmark collateral. The Covid-19 pandemic helped Bitcoin break further into the mainstream as institutions and retail investors got involved with the crypto market and its ancillary projects. Now that the Federal Reserve has turned more hawkish, riskier assets like stocks and digital assets have suffered. “Tighter Fed policy affects not only […]

It was just a matter of time before the turbocharged worlds of meme-stock and crypto trading collided in a burst of speculative frenzy. News late Thursday that GameStop Corp., which became emblematic of 2021’s turbulent year of retail investing, is getting into the business of non-fungible tokens sent the stock soaring more than 20% after hours before giving back some ground. The shares were up about 6% at $138.50 as of 10:45 a.m. Friday in New York. The jump followed a sharp retreat since late November. NFTs emerged as the hottest commodity of the crypto universe last year as prices for some digital artworks spiraled into the millions of dollars and celebrities and athletes flocked to the asset class. GameStop’s flirtation with crypto follows that of fellow Reddit-crowd darling AMC Entertainment Holdings Inc., which announced in November that it’s contemplating issuing its own cryptocurrency. Getting into the NFT trade would mark the latest pivot for Chairman Ryan Cohen, whose push to reinvent the brick-and-mortar video games seller into a digital-first retailer sparked a fervor for the stock last year, triggering large losses for hedge funds who were short the shares. “The market loves the decision, the struggling company has bought some time by dangling NFTs in front of investors,” said Tokyo-based games industry analyst Serkan Toto. “However, I am very skeptical if GameStop can make it on its own. The company definitely needs partners to compete with the likes of OpenSea and get video game companies to cooperate.” GameStop’s NFT strategy, […]

Bitcoin’s getting a drubbing this week as the Federal Reserve readies a removal of stimulus, but bulls are feeling as emboldened as ever. The largest cryptocurrency by market value has shed about $80 billion since the start of the year amid a slump that’s brought it to its lowest levels since its early-December flash-crash. But out have come predictions it can still reach the vaunted $100,000 level at some point this year. It would have to more than double from current levels around $42,900 to arrive at that milestone. Analysts say it’s not that it can’t — it’s posted plenty of triple-digit annual returns over the past decade — but that the road ahead might be more difficult for cryptocurrencies with a more hawkish Fed. “Cryptocurrencies benefited from the Fed’s massive liquidity injections since 2020,” said Matt Maley, chief market strategist for Miller Tabak + Co. “It pushed these assets too far, too fast.” In conjunction with riskier assets like U.S. equities, Bitcoin and other digital assets tumbled Wednesday after minutes from a recent Fed meeting showed officials were willing to withdraw stimulus sooner than many had previously expected. The release pointed to earlier and faster rate hikes by the central bank, which would increase the cost of capital throughout the economy. That has the potential to keep investors away from cryptocurrencies, many of which posted huge gains over the last two years amid amped-up stimulus. But not everyone agrees that this environment is lousy for crypto. Bitcoin is a risk asset […]

The malaise surrounding Bitcoin runs far deeper than its price. The world’s largest cryptocurrency has been languishing around $47,000, well below early November’s highs of nearly $69,000. A look under the hood helps explain why: Trading volumes have dried up, futures open interest is plunging and the number of active addresses has stalled out. Taken together, the data paint a picture of diminished animal spirits after Bitcoin peaked following the fall launch of the first U.S. futures-tracking exchange-traded funds. Dip buyers – a once-reliable fixture in cryptocurrency markets – have yet to meaningfully reemerge even after a 33% drawdown. Meanwhile, after billions of dollars worth of leveraged positions were flushed out in last month’s flash crash, new investors have yet to fill the void. “There was a lot of leverage in the system in May and then in the lead-up to November,” said Jim Greco, a managing director at Radkl, a crypto-trading firm. “There could be a lot of people who got washed out and they need to be replaced by new capital.” Saggy Volume Trading activity in Bitcoin has trailed off as enthusiasm has ebbed. After trending lower for months, volume across exchanges clocked in at a mere $4.8 billion on Tuesday, data from Kaiko compiled by Messari show. That’s down from $13.1 billion a year earlier, and is well below the one-year average of roughly $9.2 billion. [Bloomberg] Volume hasn’t broken above $10 billion since Dec. 4, when the price of Bitcoin plunged more than 20% in a matter of minutes in […]

Bitcoin is ringing out a banner year with a rocky finish. The largest cryptocurrency by market value is on pace to close out December with a 19% drop, its largest monthly loss since May. That’s also its worst December since 2013. And its 59% advance in 2021 marks its smallest gain for an up year since 2015, when it advanced 36%. The coin on Friday fell as much as 3.5% to trade at $45,658. That it had a breakout year, though, is now settled debate after Bitcoin and the wider crypto world spent 2021 pushing further into the mainstream and capturing more attention from finance professionals and the public at large. Those watching Bitcoin’s daily gyrations say all of it is par for the course — the coin is famous for its volatility and this year proved just as choppy as any other. “We’re seeing a little more volatility,” Chris Gaffney, president of world markets at TIAA Bank, said in an interview. “It’s a speculative asset.” Bitcoin started 2021 with a bang, quickly notching new highs as more investors — especially big-name Wall Street institutions — became interested in it as a speculative asset or as a hedge against rising prices. Other positive developments, including the launch of the first U.S. exchange-traded fund tracking Bitcoin futures, also helped propel it higher over the year. Globally, more than $20 billion was invested in crypto exchange-traded products through November, a record, according to ETFGI, a research and consultancy firm. Assets increased roughly 550% year […]