Bitcoin (BTC) saw small gains on Tuesday alongside equity futures ahead of the release of U.S. inflation numbers. The Consumer Price Index (CPI) is expected dip to an annual rate of 5.5% in January after printing 5.7% the previous month. The continued easing of inflation could prove positive for risk assets as it lowers the need for the Federal Reserve to be as aggressive with monetary policy tightening. “Today’s CPI print is crucially important to decide the extent of downside for crypto,” QCP Capital wrote in a morning note.
Bitcoin 24-hour chart.
LQTY, the native token of censorship-resistant decentralized stablecoin lender Liquidity, surged Monday after the NYDFS ordered Paxos to stop minting BUSD. The token rose 45% to a six-month high of $1.07, registering its biggest single-day percentage gain in at least a year, per data from TradingView. The rally likely stemmed from the Paxos-BUSD drama that triggered fears of a regulatory crackdown on the broader centralized stablecoin ecosystem, with some wondering if Circle’s USDC might be next. If so, the case for decentralized and censorship-resistant stablecoins like Liquity’s LUSD becomes clearer.
It was rival stablecoin issuer Circle that sounded the alarm on Paxos, according to Bloomberg. Circle reportedly tipped off the New York Department of Financial Services (NYDFS) in the fall of 2022, complaining that blockchain data revealed Binance did not have enough reserves to back up the BUSD tokens it had issued through Paxos. The revelation comes several days after CoinDesk initially reported that NYDFS was investigating Paxos.
Market Insight: GBTC Discount Widens
(TradeBlock)
Grayscale’s Bitcoin Trust (GBTC), the world’s largest publicly traded bitcoin fund, saw its discount to net asset value (NAV) rise to 47% on Monday. That’s the widest since Dec. 29 and just shy of the record 49%, according to data from TradeBlock.
The discount had been narrowing to begin 2023, slimming to about 35% at one point in January as bitcoin rallied about 50% to start the year. The crypto rally has stalled and backtracked of late, and the Financial Times reported last week that Digital Currency Group (DCG) – looking to raise cash – started selling holdings in several investment vehicles run by Grayscale at a steep discount.
Bank of America’s latest survey of global fund managers shows the percentage of money managers expecting a global economic recession in the next 12 months has dropped to 24%, having peaked at 77% in November.
The sharp decline means managers may be less hesitant to allocate money to risk assets, including cryptocurrencies, than at the end of 2022.
– Omkar Godbole
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