Bitcoin Holds Firm Near $23,000; LDO jumps on Armstrong Tweet
What did US central bank chairman Jerome Powell mean in his remarks Tuesday at the Economic Club in Washington DC?
Crypto investors and others spent much of Wednesday weighing a repeat of Powell’s claims from a week ago that the “deflationary process” had begun but that the Federal Reserve would remain vigilant to stamp out high inflation; and somewhat more hawkish remarks from three Fed governors, including John Williams, who hinted that central bankers would consider more aggressive rate hikes if inflationary sentiment worsens.
Bitcoin digested the latest developments and held steady throughout the day around its current support just below $23,000. The largest cryptocurrency by market capitalization was recently trading at $22,970, down 1.6% in the past 24 hours. BTC’s recent lull follows a momentous January surge.
“Bitcoin’s strong start to the year appears to be over for now,” Edward Moya, chief market analyst for exchange market maker Oanda, wrote in an email. “After hitting key technical resistance just above the $24,000 level, Bitcoin is entering consolidation mode.”
Moya added that bitcoin could lose its current perch with “the next big move in bond yields.”
“Bond market volatility will be wild after the Valentine’s Day inflation report, which could mean Bitcoin could drift towards the $20,000 level if stocks are hammered in the coming sessions,” a- he writes.
Yields on two- and ten-year US Treasuries fell slightly on Wednesday.
Meanwhile, ether has followed bitcoin’s lead, maintaining its most recent support comfortably above $1,600, though it was recently down more than 2% from Tuesday at the same time. hour. But as CoinDesk market analyst Glenn Williams noted in a column on Wednesday, the second-largest crypto by market value had regained its correlation with BTC after lagging so far this year. Both cryptos are up around 38% since January 1.
Other major cryptos by market value have recently been in the red, although Lido DAO’s LDO token jumped 8% at one point, with much of its gain coming late Wednesday (ET) after Coinbase CEO , Brian Armstrong, tweeted that he had heard rumors about the US securities and Exchange Commission (SEC) wants to ban retail investors from engaging in cryptocurrency staking, the revenue-generating technique at the heart of blockchain management, including Ethereum.
“I hope it doesn’t, because I think it would be a terrible path for the United States if allowed,” Armstrong wrote.
Stock markets closed with the tech-heavy Nasdaq and S&P 500, which have a tech-heavy component down 1.1% and 1.7%, respectively, as markets also continued to ponder mixed fourth-quarter earnings and employment data that were provocatively strong, suggesting that the Fed’s monetary policy has not been fully successful.
“If the Valentine’s Day inflation report ends up scorching hot, traders might start to believe in the Fed’s hawkish pullback,” Oanda’s Moya wrote.
What about the AI surge and will it last?
In a Feb. 8 analysis, CoinDesk publisher Shaurya Malwa highlighted the huge gains of AI-related tokens, including Alethea’s Liquid Artificial Intelligence (ALI) platforms, seek.ai (FET) and SingularityNET (AGIX), which jumped 220%. Malwa wrote that institutional interest has helped create a compelling case for crypto traders to bet on AI-driven tokens as the next growth area. But will the momentum last? Opinions vary as Malwa notes in a excerpt from his story.
AI broadly refers to the simulation of human intelligence in machines programmed to think and act like humans. Popular applications of this technology have so far been limited to chatbots, self-driving cars, online marketplace search optimization and image generation software – but futuristic use cases envision fully self-contained cities, cyborg humanity, and interstellar travel.
Much of the recent surge in AI tokens came after the public launch of ChatGPT chatbot and Dall-E image generation software in mid-2022. Both are legacy software that don’t use cryptocurrencies or blockchains and were pioneered by OpenAI, which recently raised $10 billion from Microsoft at a $29 billion valuation.
Such institutional interest has helped create a compelling case for crypto traders to bet on AI-driven tokens as the next growth area.
“The growth opportunity around the AI and Web3 space combines early interest, potential and hype,” says Ravindra Kumar, founder of crypto wallet Frontier. “While there may be some hype surrounding the intervention of AI in the crypto space, we see the emergence of innovative and compelling use cases.
Aditya Khanduri, Head of Marketing at Biconomy, takes a softer approach: “I think the current AI trend is still quite speculative, leading to a jump for tokens like OCEAN, ALI, AGIX. Some of the tokens with more buzz and followings have pumped and it’s less about the actual technology behind it.
“That’s because current AI tokens and Web3 projects may not yet know what these decentralized AI tools look like. There are a lot of unanswered challenges and a lot to solve,” Khanduri said. to CoinDesk in a recent conversation.
The likes of Khanduri say token-based usage while scaling AI software is a tough problem to solve.
“Suppose an AI tool reaches 250 million users. So what will its infrastructure look like? How will people use it? How will the data be formed? Where does the token fit in? Can you even have a way to reward people for their data if you used it to train your models? ” he said.
Meanwhile, some market watchers remain cautious about the AI token hype.
“Once the market starts to heat up a bit, all kinds of new trends come out of the woodwork. And not all of them are as strong as they might seem,” financial market consultant Valentina Drofa told CoinDesk.
“There is a risk that this whole ‘new trend’ will end in empty hype, as many speculators would look to use short-term price pumps,” Drofa added, referring to recent multiple gains. set up by a few tokens.
“The industry as a whole will eventually face long-term fallout and another blow to its image. Cycles like this become rather boring and sad to watch over and over again,” she said.
Crypto prices continued their cautious move higher after Federal Reserve Chairman Jerome Powell’s comments on disinflation yesterday. Fidenza Macro blog author Geoffrey Chen shared his analysis. Additionally, non-profits were leading an effort to raise millions of dollars in crypto to help victims of the major earthquake in Turkey. CoinDesk Türkiye Editor-in-Chief Serdar Turan spoke. SPiCE VC Managing Partner and Co-Founder Tal Elyashiv and Kraken Chief Strategy Officer Thomas Perfumo also joined the conversation.