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Bitcoin (BTC) was up in early trading to $10,500, rebounding after Thursday’s 11% tumble, the biggest single-day decline since March.
The sell-off, which took prices as low as about $10,000, coincided with a rout in U.S. stocks, rekindling long-simmering discussions over whether the largest cryptocurrency was a safe haven like gold or merely another risky asset. Prices for ether (ETH), the native token of the Ethereum blockchain, slid 13%, potentially a sign of anunwind of the recent fervor in decentralized finance, or DeFi. US. 10-year Treasury yields fell and the dollar gained in foreign-exchange markets, indicating a flight to safety by traditional investors.
Joe DiPasquale, CEO of the cryptocurrency-focused hedge fund BitBull Capital, told First Mover in an email that “$10,000 still stands as a strong support and has absorbed selling pressure fairly well in the last two instances.” John Kramer, a trader at crypto over-the-counter firm GSR, told CoinDesk’s Daniel Cawrey that “many investors will see this as an opportunity tobuy the dip.”
Opium, a derivatives exchange, has introduced credit default swaps (CDS) for USDT. The product, launched Thursday, insures the buyer in the event of default by Tether, the issuer of the world’s largest stablecoin andfifth-largest cryptocurrency overall.
As Opium’s blog points out, USDT is the lifeblood of theborderless cryptocurrency marketplace. The oldest stablecoin, USDT remains the largest such cryptocurrency by market cap and a top-five coin overall with$13.8 milliard in issuance. Traders often use it to move money in and out of exchanges quickly to take advantage of arbitrage opportunities.
“You can use it to protect yourself against (or speculate on) a systemic failure of the most widely used stablecoin in crypto,” Opium said of the new CDS contract, in a blog post to be published Thursday.
There are nagging questions about the issuer’s creditworthiness. The firm behind USDT isunder investigation by the New York Attorney General’s office for alleged misappropriation of funds, and Tetherrevealed in April 2019 that only 74% of USDT was backed by “cash and cash equivalents.”
Paolo Ardoino, chief technology officer at Tether, said through a spokesman: “Tether is solvent. Derfor, this solution is not really interesting to us or our community.”
The solution might be interesting to traders who just want a little extra assurance.
Bitcoin’s options market has flipped bearish with the cryptocurrency registering its first double-digit decline in six months on Wednesday. Prices fell to a low of $10,006 before recovering to $10,500.
- The one- and three-month put-call skews that measure the cost of puts relative to that of calls have surged above zero, a sign of investors adding bets (put options) to position for a more profound price drop.
- Joel Kruger, a currency strategist at LMAX Group and macro trader at MarketPunks, who hadwarned earlier this week when prices were closer to $12,000 that a correction might be looming, also sees scope for additional price declines on the back of risk aversion in equity markets.
- “The next key support comes in the form of the June low at around $8,900,” Kruger told CoinDesk in a Telegram chat and added further that bitcoin would eventually realize its potential as store of value.
– Omkar Godbole
ether (ETH): Vitalik Buterin, co-founder of Ethereum, released an ”improvement proposal” to address soaring transaction fee ratesas network congestion rises.
Bitcoin (BTC): “Supercycle” thesis from Stack Funds predictsbreach of $14K in next 100 dage.
chainlink (LINK), Tagus (XTZ): BitMEX plans futures on LINK and XTZ, detfirst new coins to appear on the exchange in over two years.
Gnosis (GNO): Investment firm Arca calls for tender offer of prediction market’s tokens asmarket value trades at 0.3% of project’s treasury balance, the Block reported.
CoinDesk Research’s latest Monthly Review features 15 charts that highlight bitcoin’s performance relative to macro assets, its relationship to the dollar and other fiat currencies, and Ethereum’s growing congestion problem. Download the report.
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