Bitcoin remains unimpressed by latest GDP, jobs data
Bitcoin was unimpressed by the latest U.S. gross domestic product (GDP) data, an unexpectedly small jump that suggested the economy was cooling, and jobless claims that indicated it was not.
The largest cryptocurrency by market capitalization was recently trading a little below its most recent $23,000 support line, down 1.4% over the past 24 hours. Still Bitcoin's more than 35% rise this year remains a feel-good story, even if analysts remain wary about its short-term prospects, along with those of other cryptos still reeling from the industry misdeeds of 2022.
"An uptick in volume in conjunction with higher prices is generally a bullish sign," CoinDesk Crypto Markets Analyst Glenn Williams wrote in his weekday column. "Flat prices however, signal that bullish and bearish investors are both actively expressing their market views."
Ether followed a similar slightly reddish path to trade just below its current $1,600 support. Other major cryptos sank more deeply with layer 1 network Aptos Network's APT token recently plunging nearly 5% to lose some of the ample ground it gained earlier this week. APT was changing hands comfortably over $17, far removed from its levels around $3.50 at the start of the year. Ethereum scaling tool Polygon's MATIC token was the exception to Thursday's price trend recently rising more than 7%. MATIC is up about 45% in 2023 amid a spike in daily transactions. The Polygon platform has the second largest number of daily active users (DAU), according to data from Token Terminal.
The CoinDesk Market Index (CDI), an index measuring cryptos' performance, recently decreased about 1%.
Equity markets continued their uneven climb upward this year with the tech-heavy Nasdaq and the S&P 500, which has a hefty technology component, jumping 1.8% and 1.1%, respectively, even as fourth quarter earnings continued to tilt negative and a rising number of firms announced layoffs in anticipation of an economic contraction. Since the start of the year, Amazon, Microsoft, Salesforce and more recently IBM have announced job cuts.
The 2.5% rise in GDP and an unexpected decline in jobless claims on Thursday had little impact on the current investment environment, which turned cautiously hopeful that inflation will continue waning without the economy falling into deep recession. That combination would likely enable the U.S. central bank to ratchet back the size of its next interest rate hike next week.
In an interview on CoinDesk TV's "First Mover" program, Jason Pagoulatos, markets associate at research group Delphi Digital, said that he didn't think the latest GDP would have a great affect on crypto markets. Pagoulatos said that instread, investors were eyeing the Fed's upcoming rate decision, although more for accompany comments than whether governors raised interest rates 25 or 50 basis points.
"The market knows that the rate hikes are going continue but at a slower pace until they reach whatever their terminal rate is," he said. "The main question is that people are trying to get clarity over is how long and then what that ultimately means for things that are still showing signs of strength like the labor market."
Litecoin forges on
Forgotten in the carnage of 2022, where new, fancy, layer-1 protocols had their price and total value locked (TVL) decimated, was Litecoin. Markets data shows that it outperformed both bitcoin and ether throughout the year.
Litecoin has been around since 2011, a fork of the Bitcoin blockchain and the first altcoin, but has stayed on the sidelines while the market became infatuated with Ethereum and layer-1s like Solana, Avalanche, Polkadot, and whatever else is surging at the moment.
Aside from an episode in the fall of 2021 involving a fake press release and Wal-Mart, Litecoin, despite its $6 billion market cap, just doesn’t command the same kind of attention as its DeFi-focused contemporaries (there is a small Litecoin DeFi community via the BoringDAO) nor does it have the institutional interest. Grayscale’s Litecoin Trust, for instance, only has Assets Under Management of $136 million, compared to the $14.65 billion in GBTC, and trades at a 55% discount compared to GBTC’s 42%.
Despite all this, over the last year, LTC is only down around 17% compared to 34% for ether and 37% for bitcoin.
Litecoin/U.S dollar daily chart (TradingView)
Data shared by CryptoQuant contributing analyst Mohsen Saleh shows that both whales and retail investors are bullish on Litecoin.
The supply distribution indicates that the assets in wallets holding fewer than 1,000 and fewer 10,000 LTC decreased from August 2020 to May 2022. However, after May 2022 this cohort began increasing their holdings, and their collective bag has grown 10% since then.
Meanwhile, the cohort of wallets that hold fewer than 100,000 Litecoin each now collectively holds more than 39 million LTC, showing that whales are also building up their supply.
“We have seen increased trading volume on Litecoin pairs over the past year, indicating that traders may be valuing faster P2P transactions in a bear market,” OKX Managing Director of Financial Markets Lennex Lai told CoinDesk.
Lai pointed out that shorter transaction and processing times, when compared to bitcoin, made it a diversification play for many traders.
There’s also the halving narrative. Like Bitcoin, of which the Litecoin protocol was forked, the rewards delivered to miners are expected to decrease from 12.5 LTC to 6.5 LTC sometime in August 2023. In turn, this reduces the supply of litecoin available as the mining process becomes less efficient. The previous halvings in August 2015 and August 2019 also pushed a bullish trend, as CoinDesk previously reported.
“It could be argued that the cryptocurrency’s price trajectory is displaying a stock-to-flow model, similar to previous halvings [where] a price rally takes place in the months leading to the halving event,” Andrey Stoychev, a Project Manager on Nexo’s Institutional Prime Brokerage team told CoinDesk.
Stoychev adds that Litecoin’s decade-plus existence on the market means a lot for traders, who continue to HODL through the good times and bad.
In crypto, sometimes it is slow and steady that wins the race. Even though it might not be exciting, the staying power of LTC as a store of value is the narrative that the market seems to respect.
Litecoin is trading at about $87.50, down about 3.5% over the past 24 hours.
All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by CoinDesk constitutes an investment recommendation, nor should any data or Content published by CoinDesk be relied upon for any investment activities. CoinDesk strongly recommends that you perform your own independent research and/or speak with a qualified investment professional before making any financial decisions.
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