Market Recap: Stocks Hold Steady While Bitcoin and Ether Soar

Are rate hikes priced in?

Stocks and crypto plummeted in January as inflation soared and the Fed announced it would look to drastically tighten monetary policy. Historically, the market has reacted negatively to the Fed increasing interest rates and slowing asset purchases. This time proved no different.

Bitcoin dropped as much as 32% since the Fed initially stated it would look to double its taper and have three separate rate hikes in 2022. The S&P 500 followed the same trend and fell as much as 10% since the announcement. However, both crypto and the stock market have slowly marched back from these intense sell-offs, a potential signal that some amount of future rate hikes and tapering could already be priced into the market.

[stock_market_widget type="accordion" template="chart" color="#5B35D5" assets="BTC-USD" start_expanded="true" display_currency_symbol="true" api="yf" chart_range="1mo" chart_interval="1d"]

[stock_market_widget type="accordion" template="chart" color="#5B35D5" assets="^GSPC" start_expanded="false" display_currency_symbol="false" api="yf" chart_range="1mo" chart_interval="1d"]

House of Representatives hearing on stablecoins

The House Financial Services Committee is holding a meeting Tuesday that will review the outlook of stablecoin regulation in the country. The meeting, titled "Digital Assets and the Future of Finance: The President’s Working Group on Financial Markets’ Report on Stablecoins," has not yet listed any witnesses and will review a report from the Treasury Department on stablecoins that was released in November.

This is not the first time Congress has held hearings on stablecoin regulation. In mid-December, the Senate Banking Committee held a hearing that included witnesses like the Circle CEO, Dante Disparte, whose company is a major issuer of stablecoins. The committee was unable to find any common ground on how to move forward with regulation.

Tomorrow's House Financial Services Committee hearing has the potential to cause some movement in the markets if any commentary is particularly positive or negative.

KPMG Canada adds crypto to balance sheet

Some of the largest news from today was the report that KPMG Canada, the Canadien arm of one of the four largest accounting firms in the world, has added both bitcoin and ether to its balance sheet. While the amounts are unknown, the addition of these crypto-assets to the balance sheet of an institution of this size is a notable moment and shows great confidence in the asset class.

Positive sentiment in the crypto market seems to be returning, with bitcoin rising 3.64% and ether rising 2.48% on the day. Other major altcoins, like Binance Coin, Cardano and Solana posted significant jumps on the day as well.

[stock_market_widget type="accordion" template="chart" color="#5B35D5" assets="ETH-USD,BNB-USD,ADA-USD,SOL-USD" start_expanded="true" display_currency_symbol="true" api="yf" chart_range="1mo" chart_interval="1d"]

Top stories

Story: FTX to Give Away Bitcoin as Part of Super Bowl Ad Campaign

• The derivatives exchange’s marketing efforts around the Feb. 13 game follow a year of sports partnerships.
• Competitor Crypto.com is also reportedly running an ad during the NFL championship game on Feb. 13.

Story: Polygon Closes $450M Raise Led by Sequoia India

• The funding will be used to build Web3 decentralized applications, or dApps, including Polygon PoS, Polygon Edge and Polygon Avail, the network stated.
• The number of dApps on Polygon’s network has increased 23,233% on-the-year from 30 dApps in January 2021.

Story: Valkyrie To Roll Out New Bitcoin Mining ETF on Nasdaq

• Firm’s upcoming ETF to follow launches of its Bitcoin Strategy ETF (BTF) and Balance Sheet Opportunities ETF (VBB).
• The fund is set to have Argo Blockchain and Bitfarms as its top two holdings.

Story: China Debuts Digital Yuan at Winter Olympics Amid Warnings From US Senator

• The eCNY, or digital yuan, can be used to make purchases within the Olympic Village.
• Senator Pat Toomey is asking policymakers to keep a watchful eye on the performance of the eCNY, labeling it as a means to “facilitate illicit money flows,” and its capacity to enhance “China’s surveillance capabilities”.

Going forward

While it seems as if some degree of future rate hikes could already be priced into the market, it's unclear how investors will react when the Fed actually puts them in place. Wednesday and Thursday are likely to be volatile market days with Fed Gov. Michelle Bowman speaking Wednesday and initial jobless claims, month-to-month CPI, year-to-year CPI and the federal budget set to release Thursday.

---

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.