Good morning. Here’s what’s happening:

Bitcoin prices: Bitcoin rose above $27.1K following comments by the president of the Federal Reserve Bank in Cleveland, who spooked investors. China also reported disappointing manufacturing data.

Insights Before House Members approved a bill raising the debt ceiling bitcoin whales sent their assets to an exchange.


Bitcoin Drops Early and Holds Above $27.1K


by James Rubin

The hawkish remarks of Cleveland’s Federal Reserve Bank President, the likelihood that the U.S. Central Bank will hike interest rates at least once more and the dispiriting Chinese Manufacturing Data kept crypto investors on their toes Wednesday.

Bitcoin, the biggest cryptocurrency by market cap, was trading at $27100, down 2.2% in the past 24 hours after spending most of the four previous days comfortably above the $27500 mark. BTC ended May (UTC), its first negative month in 2023, after having soared by more than 60 percent over the previous four months.

Mikkel Morch is the chairman and non executive director of crypto investment fund ARK36. He said that Bitcoin was under pressure to sell in response to remarks made by a prominent Federal Reserve Official, indicating a dearth of compelling reasons for a pause on liquidity tightening. These remarks have disrupted various risk assets including cryptocurrencies.

Morch said: “Simultaneously the release of discouraging data on manufacturing from China has contributed to the bearish mood surrounding bitcoin and other risks assets.”

Loretta Mester, president of the Fed Cleveland bank , said in an interview published by the Financial Times on Wednesday that she saw no reason to stop the Fed’s nearly one-year streak of rate hikes, but was willing to change her mind if prices and the current high employment market cooled. She told the Times that “we may have to move further.” “At this stage, I do not really see any compelling reason why we would not want to take a further small step in order to counter some really embedded and stubborn inflationary pressure.”

In recent weeks, crypto markets have been struggling amid concerns about inflation and uncertainty over the U.S. Government’s ability extend its debt limit. House lawmakers passed the bill on Wednesday night after a bipartisan effort overcame opposition from extreme right Republicans. The Chinese economy’s anticipated recovery slowed down at least temporarily, as the official manufacturing purchasing manager index fell to 48.8 from 49.2 last month, according to China’s National Bureau of Statistics.

Ether traded at around $1,875, down 1.4% on Tuesday. AVAX tokens of the Avalanche network and UNI native cryptocurrency of Uniswap exchange were both down more than 2% on Wednesday. The CoinDesk Market Index is a measure for the performance of the crypto markets. It was down by over 2.1% recently.

The equity markets fell, with the Nasdaq-focused S&P 500 and Nasdaq-focused Nasdaq both falling 0.6%. Investors were frightened by a JOLTS report that showed a rise in job openings to 10.1 millions instead of 9.3 million as expected for April. This broke a three-month decline streak which had given hope to observers of monetary policy hoping for a more dovish approach.

Strahinja Savi, Head of Data & Analytics at FRNT Financial’s institutional capital markets platform and advisory focused on crypto, wrote a Telegram to CoinDesk noting that cryptos and stocks had fallen together, rather than diverging, as they had over the last couple of months. Savic wrote: “Today, cryptos dip with risk assets. Tomorrow it may not.” What we can say is the technical range between a range of downside $25K to 26K and a breakout would happen decisively above 31,000. “Most other activities are probably noise.”

Have bitcoin and Ether bottomed out yet? Dave Weisberger of CoinRoutes who provides algorithmic trading strategy in the crypto-space, told CoinDesk TV bitcoin holdings were at an all time high, while BTC sales on exchanges as well as volume are low.

Weisberger stated that the trends show “that speculators move into pricing and moving away but the long-term purchasers seem happy to purchase in this range below $27K and cushion any downdraft.” It feels like we are at the bottom of an existing trading range.

The Biggest Gainers

Biggest Losers


A whale risk reduction strategy ahead of debt deal


By Glenn Williams Jr.

Data from the blockchain shows that the largest holders of bitcoin decreased their bitcoin holdings during the days preceding the debt agreement. Further data indicates an increase in BTC being sent to central exchanges. It is important to monitor what happens next as it will give a good indication of the overall sentiment.

(Glassnode)

On May 22, just before the debt agreement, the supply of bitcoins held by addresses with a balance exceeding 100K BTC decreased from 663 306 to 543 958. The key question to ask is whether this reduction was due to concerns about BTC price or short-term fiscal concerns.

The number of addresses with more than 100K BTC may be small, but the whales’ activity can have cascading consequences if they leave their positions in mass. The number of bitcoin addresses that have 1,000 BTC and more has also increased, indicating that smaller whales are also unloading their risk.

What happens next is important. A rise in the supply of bitcoin for large holders after the debt agreement will signal a renewed bullish attitude. If the decline continues, it would indicate that there are larger concerns.


Important events.

Retail Sales in Germany (YoY/April).

8 p.m. SGT/HKT(12:15 UTC). United States Employment Change ADP (May).


CoinDesk TV

If you haven’t seen it yet, here is the latest episode of “First Mover” on CoinDesk TV.

After passing a crucial test in the House Rules committee on Tuesday, the U.S. debt limit deal is nearing a vote. Rep. Warren Davidson, R-Ohio, joined “First Mover,” to discuss the impact of the deal on crypto regulation and its outlook. Dave Weisberger, CEO and cofounder of CoinRoutes, also shared his analysis on the crypto markets as bitcoin (BTC), a popular cryptocurrency, is slipping below $27,000. Astaria’s CTO Joseph Delong explains the future of NFT loans in 2023.

TradFi giant TP ICAP brings crypto spot trading to institutional investors : Last week, the Fusion Digital Assets Marketplace opened offering bitcoin and ether against the U.S. Dollar.

USDC issuer circle has withdrawn all U.S. Treasury bonds from $24B reserve fund amid debt ceiling showdown : the stablecoin issuing company now holds only cash and repurchase agreement to back USDC stablecoin value.

Multichain CEO Zhaojun unable to be contacted by the Crypto Bridging Protocol The team of Multichain says that it is unable to maintain certain cross-chain bridges unless they receive access permissions from their AWOL CEO.

StepStone VC raises $97M for two blockchain funds – SEC filings reveal pooled investment figures.

Tether, USDT’s Issuer, Ventures into Payment Processing with Georgia Investment : This stablecoin has announced that it will be investing in a sustainable Bitcoin mining facility in Uruguay.

James Rubin is the editor.