First Mover: Buying Bitcoin’s Dip, Betting Against Tether and Weighing the Jobs Report

First Mover: Buying Bitcoin’s Dip, Betting Against Tether and Weighing the Jobs Report

There's now a credit-default swap contract on Tether, allowing traders to bet on the credit risk inherent in the dollar-linked stablecoin. (Thomas Rowlandson/Metropolitan Museum of Art, modified by CoinDesk)

You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team and edited by Bradley Keoun, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can .

HOLIDAY NOTICE: First Mover will publish next on Tuesday, Sept. 8. Happy Labor Day to our U.S. readers.

Bitcoin () was up in early trading to $10,500, rebounding after Thursday’s 11% tumble, the biggest single-day decline since March. 

The sell-off, which took prices as low as about $10,000, coincided with a rout in U.S. stocks, rekindling long-simmering discussions over whether the largest cryptocurrency . Prices for ether (), the native token of the Ethereum blockchain, slid 13%, potentially a sign of an . U.S. 10-year Treasury yields fell and the dollar gained in foreign-exchange markets, indicating a flight to safety by traditional investors. 

Joe DiPasquale, CEO of the cryptocurrency-focused hedge fund BitBull Capital, told First Mover in an email that “$10,000 still stands as a strong support and has absorbed selling pressure fairly well in the last two instances.” John Kramer, a trader at crypto over-the-counter firm GSR, told CoinDesk’s Daniel Cawrey that “many investors will see this as an opportunity to .”

After  whether tether () is fully backed 1-for-1 with U.S. dollars, the  ’s critics and defenders alike can now put their money where their mouths are.

Opium, a derivatives exchange, has introduced credit default swaps (CDS) for USDT. The product, launched Thursday, insures the buyer in the event of default by Tether, the issuer of the world’s largest stablecoin and . 

As Opium’s blog points out, USDT is the lifeblood of the . The oldest stablecoin, USDT remains the largest such cryptocurrency by market cap and a top-five coin overall with  in issuance. Traders often use it to move money in and out of exchanges quickly to take advantage of arbitrage opportunities.

“You can use it to protect yourself against (or speculate on) a systemic failure of the most widely used stablecoin in crypto,” Opium said of the new CDS contract, in a blog post to be published Thursday.

There are nagging questions about the issuer’s creditworthiness. The firm behind USDT is  by the New York Attorney General’s office for alleged misappropriation of funds, and Tether  in April 2019 that only 74% of USDT was backed by “cash and cash equivalents.” 

Paolo Ardoino, chief technology officer at Tether, said through a spokesman: “Tether is solvent. Therefore, this solution is not really interesting to us or our community.” 

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The solution might be interesting to traders who just want a little extra assurance.  

-William Foxley

Bitcoin’s options market has flipped bearish with the cryptocurrency registering its first double-digit decline in six months on Wednesday. Prices fell to a low of $10,006 before recovering to $10,500.

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– Omkar Godbole

Ether (ETH): Vitalik Buterin, co-founder of Ethereum, released an ” as network congestion rises. 

Bitcoin (BTC): “Supercycle” thesis from Stack Funds predicts .

Tether (USDT), USD Coin (): Stablecoins are the , Castle Island’s Nik Carter writes for CoinDesk. 

Chainlink (), Tezos (XTZ): BitMEX plans futures on LINK and XTZ, the .

Gnosis (GNO): Investment firm Arca calls for tender offer of prediction market’s tokens as , the Block reported. 

CoinDesk Research’s latest Monthly Review features 15 charts that highlight bitcoin’s performance relative to macro assets, its relationship to the dollar and other fiat currencies, and Ethereum’s growing congestion problem. .

 

 

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