Bitcoin drops to lowest level in almost a month.
Good morning, Asia. This is what is happening in the markets.
Federal Reserve Chairman Jerome spoke tough for the second straight day. Banking giant JPMorgan ended its relationship with crypto exchange Gemini, as CoinDesk’s Ian Allison first reported. Crypto-friendly bank Silvergate is closing operations.
Bitcoin took it all in and then slowly tumbled to its lowest level in nearly a month. The largest cryptocurrency by market capitalization recently traded at around $21,750, down more than 2% in the past 24 hours. BTC at one point dipped below USD 21,600 after largely hovering above USD 22,000 for much of this month. Investors have struggled with worrying jobs and pricing data prompting Powell and Federal Reserve governors to revive their monetary aggressiveness as inflationary prescriptions.
The outlook for a rate hike of 50 basis points (bps) is now around 70%, after a strong preference for a more moderate 25bp hike in recent weeks.
“After celebrating disinflation greenshoots over the past two months, the Federal Reserve has had to restart its aggressive positioning by talking loudly about rate hikes. it became clear that inflation is proving to be more stubborn than expected. Quinn Thompson, head of growth and capital markets at blockchain-powered capital markets platform Maple, wrote CoinDesk in an email. “A rate hike of 50 basis points is now in principle inevitable.”
Thompson added that “barring any break in the system, such as some kind of credit event, it seems increasingly likely that interest rate cuts won’t happen until next year.”
Ether fared similarly to bitcoin, also falling about 2% to change hands just above USD 1,530. That level was well above the late-February highs of over $1,700. Other major cryptos were mostly in the red with SOL, the token of the Solana blockchain up more than 9% and APT, the native cryptocurrency of layer 1 blockchain Aptos Labs up more than 6%. The CoinDesk Market Index, a measure of the performance of the broader crypto market, fell nearly 3%.
The Nikkei rose about 0.5% as Asian stock markets opened trading. US indices remained flat with the technology-heavy Nasdaq and the S&P 500, which has a technology-heavy component, up slightly, but the Dow Jones Industrial Average (DJIA) fell a few ticks of a percentage point.
IMaple’s Thompson was wary of the crypto’s prospects amid the Fed’s apparent aggressive turn, which has historically driven down the prices of crypto and other riskier assets.
“I suspect we can retest the lows reached last year due to interest rate hikes, but also due to the Fed’s ongoing monetary tightening regime that is sucking liquidity out of the markets,” he wrote. “Much of this tightening monetary policy is being priced into fixed income markets. But risk assets have yet to factor in the potential for downside spillovers, and this could spell trouble for equities and crypto.”
The great promise of Conic Finance, but will it deliver?
An earlier version of this story popped up separately on CoinDesk’s website.
A new yield capture tool from the prominent stablecoin swapping service Curve has attracted just over $60 million from savers just over a week after its launch.
Conic Finance, which went live on March 1, allows users to deposit tokens into its omnipools, a new product that diversifies exposure across the Curve ecosystem while increasing rewards.
Each omnipool allocates the liquidity of a single asset to different Curve pools. All Curve liquidity provider (LP) tokens are staked on Convex to increase curve revenue (CRV). Convex (CNX), another Curve ecosystem token, is also rewarded, as is Conic (CNC), Conic’s native token.
Conic users can earn up to 21% annualized returns on the three omnipools for dai (DAI), frax (FRAX), and USD coin (USDC). The USDC pool has attracted more than $50 million in liquidity alone as Conic is currently delivering some of the highest yields available in the crypto market for USDC. Deposits from frax and dai are significantly lower at $7 million and $5 million respectively.
Holders can lock their CNC tokens for vlCNC to participate in Conic governance and directly determine how liquidity is allocated to Curve pools by participating in Conic’s Liquidity Allocation Votes (LAV) – which determine what portion of the liquidity of an omnipole can receive a Curve pole.
In the coming weeks, Conic’s demand among traders for its revenue-generating products could eventually generate value for its own CNC token.
As such, CNC tokens are currently trading at $8 and have lost 4% in the last 24 hours with a market cap of $32 million.
To be sure, not all DeFit observers fully embrace Conic’s approach. Colin Johnson, the CEO and co-founder of Freeport, a tokenized art investment platform, called Conic “an exciting new way to access yields within the Curve ecosystem,” but added warily that “we’ve seen historically what happens with promised returns of 20% or more (Terra).”
“They fade quickly — which is likely to happen here — or they build up an amount of stress that the system can’t handle, and we have an implosion,” Johnson wrote. “Users should always be wary when yield is delivered in a token that represents the system they are interacting with. When that token falls out of favor, the price tends to fall.”
Curve is using smart contracts to provide an efficient way to exchange stablecoins while maintaining a low cost and low slippage, according to developer documents. Depositors on Curve earn annual returns of up to 4% from one of the many pools on the platform, which locks over $5 billion in Ethereum-based tokens on its platform.
Curve Tokens (CRV) are issued as yield farming rewards to liquidity providers on Curve Finance and can be converted into Vote Captured CRV (veCRV). By holding veCRV, users can participate in platform management, earn higher rewards and allowances, and receive airdrops.
The tokens are time-bound, meaning users are incentivized to lock their CRV for a long time to receive more veCRV and platform rewards. However, this mechanism effectively blocks liquidity, leading to an opportunity cost for users.
This is where protocols like Conic come into play, allowing users to gain exposure to, or provide liquidity to, the Curve ecosystem to get rewarded, while not having to lock their tokens for long periods of time by depositing directly into Curve .
Bitcoin fell to a three-week low after US Federal Reserve Chairman Jerome Powell’s hawkish testimony to Congress urged traders to price in a higher “closing price”. Martha Reyes, member of the advisory board of the Digital Economy Initiative, weighed in. Additionally, NEAR Foundation CEO Marieke Flament discussed her take on Web3 and female leadership in the crypto space on International Women’s Day. Grayscale Investments Chief Legal Officer Craig Salm, MenaPay CEO Çağla Gül Şenkardeş and WomenInDeFi Brand Strategist Umeh Chinonye also joined the conversation. Grayscale and CoinDesk are both owned by Digital Currency Group (DCG).
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