First Mover Americas: Bitcoin Retakes $30K as ‘Institutional Adoption’ Makes Crypto More Like Stocks

Good morning, and welcome to First Mover. I’m Brad Keoun, here to take you through the latest in crypto markets, news and insights. (Lyllah Ledesma is off this week.)

Bitcoin (BTC) was back above $30,000 after losing the crucial foothold on Monday.

With crypto markets still looking wobbly after last week’s crisis on the Terra blockchain, any signs of stabilization should be heartily welcomed by bitcoin bulls. Arcane Research, a Norwegian cryptocurrency analysis firm, wrote Monday that the market could get a jolt of fresh energy if bitcoin ends the week over $32,000.

For the time being, though, “there is little reason to argue that a prolonged rise will follow the current buying, as the fundamentals (tightening markets, slowing economy) remain in place,” Alex Kuptsikevich, FxPro senior market analyst, wrote in emailed comments.

Ether (ETH) added 2.2% in the past 24 hours to trade above $2,000, with similar gains for Avalanche’s AVAX, BNB Chain’s BNB, and Dogecoin.

Polygon’s MATIC (MATIC) gained 5.5% as Polygon Studios CEO Ryan Wyatt said the firm was working with Terra projects affected by last week’s implosion and would onboard them to Polygon’s broader DeFi ecosystem. Terra held billions of dollars in value on various DeFi applications, such as Anchor, before last week’s fall.

In traditional markets, U.S. stock futures were higher ahead of Tuesday’s exchange open in New York, along with gold. The yield on the 10-year U.S. Treasury bond was up 0.04 percentage point to 2.92%. The U.S. Dollar Index (DXY) was down 0.8%.

The uplift in global markets came as traders priced in expectations of relaxation of norms in Shanghai after weeks of strict lockdowns, leading to a bump in Chinese stocks. Policymakers in Beijing are taking steps to alleviate the economic slowdown, with various moves in the past week to boost its economy.

Traders could get fresh clues on U.S. central bankers’ latest plans to tamp down fast-rising inflation from a 2 p.m. ET (18:00 UTC) appearance by Federal Reserve Chair Jerome Powell.

By Helene Braun

A key narrative in the crypto world in 2021 was the arrival of institutional investors to the space. Tesla (TSLA) bought $1.5 billion worth of bitcoin (BTC) and Wall Street banks like JPMorgan Chase (JPM) and Morgan Stanley (MS), as well as hedge funds, started allocating client assets to bitcoin that year.

Not only were these institutional investors a sign of growing mainstream acceptance, they also appeared to drive up prices. Crypto boomed with the sector’s market capitalization growing 185% that year.

Now, as the crypto market’s latest swoon wipes off $1.25 trillion from the industry’s all-time high market capitalization reached late last year, the question has risen: What role is institutional money playing in the crash? Or to put it more bluntly, are institutional investors making things worse?

One thing we know: The crypto market is increasingly correlated to the stock market, and institutional investors appear to have heightened that correlation. And when the stock market goes down, it takes crypto with it.

“The influx of institutional interest in BTC, which started to pick up in early 2020 with public declarations of interest from stalwarts of traditional investing, such as Paul Tudor Jones and Renaissance Technologies, coincides with a sustained jump in the 60-day correlation between BTC and the S&P 500,” according to an April 2022 report by Genesis Trading. (Genesis is a subsidiary of Digital Currency Group, which also owns CoinDesk.

Read More: Big-Money Investors Who Boosted Bitcoin’s Price Might Now Crash It

By Shaurya Malwa

Terra’s LUNA shed nearly a quarter of its value in the past 24 hours after a proposed revival plan revealed by founder Do Kwon, data shows.

LUNA rose to as much as $0.00022 on Monday evening as plans to fork the current Terra blockchain went viral on social media. It then shed as much as 22% in early Asian hours to trade at just over $0.00017 at writing time. Some $2.1 billion worth of the tokens were traded in the past 24 hours alone.

The token is down more than 99% since April highs of nearly $120. The drop came as excess LUNA was put into circulation last week to prevent the collapse of terraUSD (UST), a Terra ecosystem stablecoin pegged to U.S. dollars, as reported.

Sentiment remains mixed for the proposal among the crypto community.

Some said they would support the new chain and anticipated the airdrop to prior holders. Others suggested the plan was unfair, as it could vastly benefit investors who purchased massive amounts of LUNA at a few pennies more than those who purchased the tokens when they were valued above $100. To combat this, however, Kwon proposed holding two snapshots – one prior to UST’s collapse, and one after – and airdropping equivalent amounts of new tokens.

Read More: Terra’s LUNA Gains, Then Slides, After Do Kwon’s Fork Proposal

Today’s newsletter was edited by Brad Keoun and produced by Parikshit Mishra and Stephen Alpher.