Market Wrap:Bitcoin Surges as Fed Governor Talks Down 100 Basis Point Rate Hike

Bitcoin surged in Thursday trading after Federal Reserve Governor Christopher Waller said he supported an interest rate hike of 75 basis points (0.75 percentage point) in July, easing fears of a larger 100 basis-point raise to combat high inflation.

The largest cryptocurrency by market capitalization was trading at around $2,680, up 4.8% in the past 24 hours.

Traders of Federal funds on the CME exchange now see a 56% likelihood that the Federal Reserve will raise the target interest rate by 75 basis points to a range of 2.25%-2.5% this month. A day earlier, the odds were seen at 20% after an unusually hot Consumer Price Index reading for June prompted traders to shift their bets to a 100 basis-point increase.

VGX, the native token of bankrupt crypto lender Voyager Digital, tripled in price over three days in a short squeeze, reaching a high of 95 cents on July 13. An unknown firm named MetaFormLabs contributed to VGX’s rally, tweeting about a “#PumpVGXJuly18” plan with a $5 target price point for July 18.

“That’s an ambitious goal considering Voyager’s problems. Besides, crypto pump schemes have a bad reputation for being exit strategies for whales and scammers and trapping retail investors on the wrong side of the market,” CoinDesk’s Omkar Godbole reported.

VGX has since slumped back to around 46 cents, down 52% from its Wednesday high.

Most altcoins were in the green, with Uniswap’s UNI token leading market gains. UNI spiked 21% over the past 24 hours after being added to broker Robinhood’s crypto listings.

Polygon’s MATIC token spiked 19% after the Ethereum scaling tool was selected to participate in Disney’s 2022 Accelerator program.

Ethereum rose 10% as the network’s ninth shadow fork went live amid testing for its upcoming Merge.

Latest prices

●Bitcoin (BTC): $20,571 +4.9%

●Ether (ETH): $1,192 +11.1%

●S&P 500 daily close: 3,790.38 −0.3%

●Gold: $1,707 per troy ounce −1.5%

●Ten-year Treasury yield daily close: 2.96% +0.06

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

Celsius Joins the Bankruptcy Club

Celsius Network filed for Chapter 11 bankruptcy protection late Wednesday, becoming the third liquidity-strapped crypto lender to do so in July, following Voyager Digital and Three Arrows Capital.

“This is the right decision for our community and company,” Celsius co-founder and CEO Alex Mashinsky said in a statement on Wednesday. “We have a strong and experienced team in place to lead Celsius through this process. I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company.”

During the past couple of weeks Celsius has been paying off all of its debt to decentralized finance (DeFi) platforms Maker, Aave and Compound, freeing up locked collateral.

Celsius said in a statement the firm has “$167 million in cash on hand” to provide liquidity and “support certain operations during the restructuring process.”

Celsius has also filed a series of motions to continue operations as usual, including “requests to pay employees and continue their benefits without disruption.” However, the crypto lender said that it will not be “requesting authority to allow customer withdrawals at this time.”

In June CoinDesk quoted people familiar with the situation saying Goldman Sachs (GS) was seeking to raise $2 billion from investors to buy distressed Celsius assets if the company declared bankruptcy. The investment banking firm has not confirmed any further actions yet.

Celsius’s CEL token plummeted to a low of 44 cents within hours of filing for bankruptcy and is now trading at around 76 cents, 18% down in the last 24 hours.

Altcoin roundup

• Ethereum’s ninth shadow fork goes live: The network continues to test its imminent transition from a proof-of-work to a proof-of-stake consensus model. Developers are focused on testing recent updates and the releases used in the previous Sepolia hard fork, “but on a more intensive network.” Read more here.
• Analysts see CEL token recovery despite Celsius bankruptcy: Although CEL fell more than 10% in the past 24 hours, some traders see a “fresh start” for the token and believe that it could recover in the future despite the current actions of its management team. Read more here.
• Kevin Rose’s Proof acquires Divergence engineering team: The entrepreneur’s non-fungible token (NFT) project, which is responsible for the Moonbirds collection, is gearing up for a “social universe” launch later this summer with the acquisition of Divergence, a London-based engineering firm. Read more here.

Relevant insight

• Listen 🎧: Today’s “CoinDesk Markets Daily” podcast discusses the latest market movements and takes a look at how to make working from home more secure.
• Uniswap Token Rallies After Being Added to Robinhood’s Crypto Trading Menu: Offering UNI sent the token higher Thursday afternoon.
• Crypto Traders Say Inflation Already Priced Into Bitcoin: “It’s the same old devastating and boring accumulation phase,” one observer said.
• Voyager Digital’s Token Surges Over 250% on ‘Short Squeeze’: A short squeeze refers to a sharp rally fueled by the unwinding of bearish positions or several sellers rushing to take profits.
• CoinFLEX Restarts Withdrawals With 10% Limit: Customers still won’t be able to withdraw the platform’s native token, though.
• Brazil’s Largest Private Bank Itaú to Launch Tokenization Platform, May Eventually Offer Crypto Trading: Itaú’s new business unit will, among other things, offer crypto custody services for its customers.
• Plaid Adds Crypto Account Data to Its Platform: The information will be in read-only mode.
• Bitcoin Production Cost Has Dropped to About $13K, JPMorgan Says: Declining production costs could be seen as a negative for bitcoin prices, the Wall Street bank said in a report.
• Crypto Miner CleanSpark Continues to Take Advantage of Bear Market as it Scoops Over 1K Rigs: In June, the Las Vegas-based miner bought contracts for another 1,800 mining rigs.
• Paradigm Leads $16M Funding Round for Hang: The NFT brand membership platform went live on Thursday.
• Virtual Avatar Firm Hologram Raises $6.5M Seed Round: Hologram partners with online communities to help them create unique digital identities in the metaverse.