Cryptocurrency
Circle cut USDC supply by 4.5 billion in five days
Stablecoin issuer USD Coin (USDC) Circle redeemed about 6.2 billion coins. This is reported by data from analytics platform Arkham, reports The Block.
In doing so, about $1.66 billion was issued, resulting in a net redemption of just over $4.5 billion. Thus, market supply of the stablecoin has returned to 2021 levels.
“Even though Circle included redemptions and guaranteed that they would be met out of reserves, it appears that USDC holders are still nervous about the current situation,” said Stephen Zheng, director of research at The Block Research.
Circle holds its cash reserves at many other banks, he said, and if those banks encounter the same problems as Silicon Valley Bank (SVB), it could lead to the USDC becoming unbound from the U.S. dollar again. He added that this is “not worth the risk compared to the limited rewards that are currently in cryptocurrency.”
On March 10, the California Department of Financial Protection and Innovation closed SVB due to “lack of liquidity and solvency” and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. Silicon Valley Bank’s closure was the largest since the 2008 financial crisis. After the news that Circle had reserves in the bank, the USDC lost its peg to the U.S. dollar.
Circle has also promised to cover any shortfall in the assets that stablecoin provides. The company’s head and co-founder, Jeremy Allaire, conceded that the return of assets could be delayed. However, days after the bank closed, he reported that Circle could regain access to the assets that had been held at SVB. They had already been transferred to another institution, and Stablecoin had almost recovered in value. According to CoinMarketCap, USDC is currently trading at $0.9988.
The USDC’s decoupling from the dollar also did not provoke another blow to the crypto market: the crypto market’s fear and greed index rose sharply, while the stock market index was in the extreme fear zone. The price of bitcoin (BTC) also rose, crossing the $25,000 mark.
We previously reported that deflation in Ethereum reached an all-time high six months after the move to PoS.
Cryptotraders had a tough day: almost 68,000 positions were liquidated on exchanges in the last 24 hours, and the total volume of liquidations exceeded $257,000,000. All this happened against the news of the US Federal Reserve’s rate hike and another Securities and Exchange Commission regulatory action against cryptocurrencies.
Cryptotraders lost $132,000,000 in BTC
Bitcoin, Ethereum, and Ripple were the leaders in the number of forcibly closed positions. BTC liquidations totaled almost $132,000,000; Ethereum traders lost $51,000,000. XRP positions accounted for about $8,000,000 of liquidations. Bitmex exchange executed the largest order of $7.39,000,000.
Cryptocurrency market capitalization has declined 2% in the last 24 hours, but is still above the $1 trillion mark.
The weekly CoinShares report also recorded a massive outflow of funds for six consecutive weeks. During that period, nearly $500,000,000 was withdrawn from cryptocurrency platforms, with $113,000,000 coming from bitcoin. Analysts at the company believe the outflow is due to liquidity needs during the banking crisis rather than a negative outlook. The company mentions that a similar scenario was seen in March 2020 amid a COVID-19-induced panic.
Regulators continue to hunt the cryptobusiness
Another reason for the increased volatility in the market has been harsh action from U.S. regulators. Last night it became known that the U.S. Securities and Exchange Commission sued cryptomagnate Justin Sun, accusing him of fraud and market manipulation.
The SEC also issued a notice of wrongdoing against Coinbase, the largest U.S. cryptocurrency exchange. The securities regulator sued Coinbase Global Inc, for some of the products it offers.
We previously reported that Bitcoin (BTC) tests $28,000, but onchain metrics urge caution.
Employees of the cryptocurrency exchange Binance help clients from China to bypass compliance and verification. CNBC writes about it, citing hundreds of corporate emails from exchange employees on Discord and Telegram. It is reported that Binance has helped over 200,000 users register, bypassing its own security system. One case describes correspondence between a user from China and a Binance employee.
The employee under the pseudonym yaya.z suggested the user from China turn on a VPN, register as a Taiwanese resident and then return the location to China. Binance employees also advise customers not to use VPN services from the U.S., Hong Kong and Singapore, because the exchange does not provide services in those regions, writes CNBC. At the same time, Binance freely processes applications from U.S. email providers like Gmail or Outlook for registration.
The exchange even offers specialized mobile applications for customers from China. A CNBC reporter could download a special mobile application from Binance via email. At the same time, no VPN was needed to download the app, as the download was conducted through the domain of binance[.]com. It is also alleged that the exchange still verifies users with Chinese phone numbers.
An exchange spokesperson denied the existence of a special Chinese version of the mobile application. The exchange also added that it has improved the system to identify users from banned regions. CNBC notes that after providing evidence, Binance removed employee messages from corporate chats to circumvent KYC.
We previously reported that the Ethereum (ETH) price crossed the $1,800 mark, opening the way to $2,000.
The market remains in a bearish trend and bitcoin (BTC) will resume its fall and test $16,000. There are two reasons:
The first statement can be confirmed or disproved by a technical analysis of the cryptocurrency market, but there is not enough additional information for the second.
The market capitalization of altcoins (ALTCAP) does hold nearly $605 billion of resistance. Although ALTCAP has risen above it several times, it didn’t develop above this area.
However, the daily RSI has broken through the bearish divergence trendline (green line). Such a breakout often precedes significant reversals into a bullish trendline. As a result, ALTCAP will move higher towards the $680B resistance area. If not, ALTCAP could fall back to the $518B support area.
There are also those who argue that bitcoin will test the $10000-$11000 area because there is a CME price gap that needs to be filled. The gap refers to the difference between the closing price of bitcoin futures on the Chicago Mercantile Exchange (CME) on Friday and the opening price on the following Monday.
We previously reported that Hong Kong has allocated another $50,000,000 to the crypto industry.
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