Cryptocurrency
These 4 popular stablecoins have only benefited from USDC’s troubles
Circle, the issuer of the second-largest stablecoin USDC by market capitalization, announced last Friday that it keeps about $3.3 billion in cash reserves at Silicon Valley Bank. Amid the news, the asset temporarily lost its peg to the U.S. dollar and fell to $0.87.
The intervention of the U.S. and UK regulators contributed to the rapid recovery of USD Coins. Despite this, the confidence of the cryptocommunity in the company was noticeably shaken, and many investors rushed to transfer funds from USDC to other stablecoins. Circle’s four competitors were luckier than the rest: let us tell you who made the list.
Tether (USDT)
Tether is the most controversial company on our list. Back in 2021, Alex Mashinsky, CEO of bankrupt cryptocurrency lender Celsius, told the Financial Times that Tether mines USDT against bitcoin and Ethereum for some big clients. Such actions directly contradict the company’s own terms and conditions.
According to the last published audit report, dated December 2022, 82% of the company’s reserves are held in “cash and cash equivalents, other short-term deposits and commercial paper,” which primarily consist of U.S. Treasury bills (58.5% of all reserves). Cash and bank deposits account for 8% of the total, with the remainder distributed among funds, reverse repurchase agreements, U.S. non-treasury bills, and other assets.
Before the USDC incident, USDT had a market capitalization of $71.9 billion, which had risen to $75 billion by Monday evening, representing an overall increase of 1.5% over the period under review.
Dai (DAI)
DAI is an algorithmic stablecoin issued by one of the pioneers of decentralized finance (DeFi) MakerDAO. It is backed by cryptocurrency – mostly USDC, although some Ethereum-based tokens can be used to mine new coins.
An algorithmic stablecoin is a digital asset whose exchange rate is tied to a specific currency, a basket of currencies, a cryptocurrency, a basket of cryptocurrencies or other assets. For example, if a coin is pegged to the U.S. dollar at a 1:1 ratio, its exchange rate should always be near the $1 mark. An algorithm is responsible for stabilizing algorithmic stablecoins. It keeps the exchange rate of tokens close to a predetermined level.
Last Friday DAI had a market capitalization of $4.9 billion. By Monday morning it had risen 28.6% to $6.3 billion.
True USD (TUSD) – the most reliable stablecoin
TrueUSD is a centralized regulated stablecoin from TrustToken. Introduced in 2018, 1:1 U.S. dollars fully backs TUSD, confirming Chainlink’s reserve proof.
TrustToken holds fiat reserves in third-party bank accounts owned by trust companies that have signed an agreement to publish monthly audits. This reduces counterparty risk, protects token holders, and makes sure that the TrustToken platform itself has no direct access to funds.
After the SEC opened an investigation into BUSD issuer Paxos, Binance focused on TUSD and smuggled more than 180 million tokens. This explains the rapid growth in its capitalization by 114.5% in the last thirty days.
Last Friday, TUSD had a total value of about $1.3 billion. Over the weekend, it rose 53.8% to over $2 billion.
Liquity USD (LUSD)
LUSD is a native token of the Liquity DeFi lending protocol. Users obtain loans in LUSD using Ethereum as collateral. For every $1.10 ETH blocked in a Liquity smart contract, there is $1 LUSD. This makes the pledge ratio more favorable to borrowers than MakerDAO.
LISD had a market capitalization of about $230 million before USDC decoupled, up 10.4% over the weekend.
We previously reported that Goldman Sachs will increase transaction speeds fivefold thanks to blockchain.
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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