Weekly Crypto Analysis: BTC Volatility Dries Up, Silvergate and Stablecoins in the Spotlight
Bitcoin's price took a sharp dive on Thursday evening as over $62 million in BTC long positions were liquidated during the Asian overnight trading session. The decline occurred at 01:00 UTC and saw BTC fall by over $1,000 in minutes to $22,500. At the same time, ETH responded similarly and declined to $1,570.
Negative reactions to viability concerns surrounding crypto bank Silvergate (SI) appeared to be the primary driving force behind the decline. This follows a relatively slow week for Bitcoin price, which had been showing signs of stability.
Interestingly, correlations between crypto and traditional financial assets have also loosened, with the correlation coefficient involving BTC, ETH, and the S&P 500 sitting at -0.15. The correlation coefficient ranges between 1 and -1, with a higher positive read indicating a direct pricing relationship between assets and a lower negative read implying an inverse relationship.
BTC Pearson Correlation | Source: Cryptocompare
Additionally, for the first time since June 2021, BUSD's circulating supply has fallen below $10 billion. This news comes amidst declining demand for the stablecoin following Paxos' announcement on February 13th that it would no longer mint new BUSD tokens.
Paxos cited orders from the state regulator New York Department of Financial Services (NYDFS), as the reason behind its decision to cease minting BUSD. Additionally, the U.S. Securities and Exchange Commission (SEC) was reportedly preparing to sue Paxos for offering unregistered securities.
In a sudden turn of events, Lido's LDO token faced a massive 10% drop in value on Saturday. The reason behind this significant decline was a rumor that the United States Securities and Exchange Commission (SEC) had served a Wells Notice to the largest Ethereum staking service.
Cryptocurrency Price Heatmap | Source: Coin360
Top Altcoin Gainers and Losers
Top Altcoin Gainers
Maker (MKR) ➠ +25.12%
Synthetix (SNX)➠ +16.72%
SingularityNET (AGIX) ➠ -13%
Top Altcoin Losers
Klaytn (KLAY) ➠ -21.9%
Floki (FLOKI) ➠ -20.50%
Theta (THETA) ➠ -18.4%
Fear and Greed Index at 47, Market In Neutral Territory
Several negative reports about Silvergate and Tether have caused the crypto market to turn a bit fearful. The Fear and Greed index remained slightly skewed at 47, and the crypto market’s fear and greed index can move more toward the fear zone.
Fear & Greed Index | Source: Alternative
This Week’s Crypto News Highlights
BUSD Market Cap Shrinks, Stablecoins Remain Strong
The overall stablecoin market cap remained unchanged despite news about Paxos’ decision to stop minting BUSD. However, BUSD’s market cap shrank significantly, dropping from $16.8 billion to $8.8 billion.
Stablecoin Circulating Supply | Source: Glassnode
As people are moving away from BUSD, they are exchanging it mainly to USDT and USDC. On the other hand, TUSD increased its market cap by $200 million, becoming the 5th largest stablecoin. DAI has not made any significant gains.
India Explores CBDCs to Function like the Rupee— RBI Executive Director
Ajay Kumar Choudhary, Executive Director of the Reserve Bank of India (RBI), recently announced that the digital rupee, India's new central bank digital currency (CBDC), is undergoing offline testing. The RBI, India's regulatory body, initiated the wholesale segment pilot for the digital rupee on November 1, 2022, with 50,000 users and 5,000 merchants participating in real-world testing. As of February 25, $134 million and 800,000 transactions have been processed via wholesale CBDCs, marking substantial progress.
Expanding on this development, Choudhary informed CNBC TV18 that the RBI is exploring the digital rupee's potential for cross-border transactions and integration with legacy systems in other countries. He stated that the RBI is eagerly anticipating the participation of private sector and fintech firms in CBDC, especially with respect to offline and cross-border CBDC transactions.
Furthermore, Choudhary, speaking on behalf of the RBI, revealed that the CBDC would soon replace physical currency as the medium of exchange and would include features like anonymity. India's goal in introducing the CBDC is to promote regional financial inclusion and drive the digital economy.
BNB Chain Hackathon Winner Accuses Binance of Stealing AI-powered NFTs Idea
Binance has been accused of flagrantly plagiarizing the winner of the BNB Chain hackathon by launching Bicasso, an AI-based nonfungible token (NFT) creation tool. Chatcasso, the original creator, was allegedly ripped off by Binance just two months after being awarded first prize in a BNB Chain hackathon held in Seoul from Dec. 17–19, 2022.
On March 1, Binance's CEO, Changpeng "CZ" Zhao, announced the launch of Bicasso, an artificial intelligence (AI) product designed to assist users in transforming their creative ideas into NFTs using AI. However, community member "ggoma" believes that Binance copied and promoted the Chatcasso project as its own.
In response, Binance denied the accusations of plagiarism. According to a spokesperson, Bicasso is an experimental project created by a small team at Binance as a trial run, and NFTs and AI are common concepts that many industry players work on.
Chatcasso won the first prize in the BNB Chain hackathon for creating an AI-powered tool for creating NFTs, earning $5,000 in Binance USD. However, ggoma was taken aback by the fact that Binance launched a similar platform within two months, stating:
Furthermore, ggoma provided screenshots of both projects to demonstrate the similarities in user interface and capabilities.
Sen. Elizabeth Warren and Colleagues Demand To See Binance’s Balance Sheets
A group of three US senators, including Elizabeth Warren, have written a letter to Binance CEO Changpeng “CZ” Zhao and Binance.US CEO Brian Shroder expressing concerns over various aspects of Binance's operations. The senators, Chris Van Hollen, a fellow Democrat, and Roger Marshall, a Republican, joined Warren, who is known for being critical of cryptocurrencies, to raise issues such as the companies' alleged attempts to evade US regulators and sanctions, as well as their role in facilitating the laundering of at least $10 billion. The senators also pointed out the lack of transparency of Binance's operations.
The letter requested several documents and information, including all balance sheets of Binance and its subsidiaries from 2017 to the present, copies of Anti-Money Laundering policies, documentation of the relationship between Binance and Binance.US, and explanations of various news reports. The senators gave the addressees two weeks to respond.
The letter, which included 59 footnotes, highlighted the intense press scrutiny and negative speculation that Binance has faced recently. CZ has personally responded to some of the reports on social media. In February, it was reported that Binance was preparing to settle outstanding regulatory and law-enforcement issues in the United States and would possibly face penalties.
Silvergate Stock Plunges 31% After Delayed Filing Raises Doubts Over Future
Silvergate, a crypto bank, has announced that it will require an additional two weeks to finalize the report for the 2022 fiscal year. The delay was caused by the sale of additional debt securities in January and February, which resulted in further anticipated losses in the coming months.
This situation has the potential to negatively impact the regulatory capital ratios of the company and its wholly-owned subsidiary, Silvergate Bank, and may result in the company and the bank being classified as less than well-capitalized. The firm has also stated that it is assessing the impact of these subsequent events on its ability to continue as a going concern for the next twelve months.
Silvergate is presently reevaluating its businesses and strategies in the context of its current challenges. The company is also working on completing a series of audits by conducting additional procedures and providing requested documentation to its independent registered public accounting firm.
Bitcoin (BTC/USDT) Technical Analysis
Volatility has seemingly been drying up in Bitcoin. After dropping $1,300 in a span on 1 hour last week, Bitcoin has kept on consolidating between the local $22,000 support and $22,600 resistance. The VRVP indicator shows this price range has garnered many buyers and sellers. Losing it might see Bitcoin at $21,600.
BTC/USDT Chart on the Hourly Timeframe | Source: KuCoin
There is also no definite proof of upward momentum as the cryptocurrency market leader trades on the 50MA. The average True Range (ATR) used to see market volatility has also dropped.
BTC/USDT Chart on the Monthly Timeframe | Source: KuCoin
On the monthly chart, an evening candle has been confirmed. The last time it was seen was in April 2022, before Bitcoin went on a massive dump. If we don’t see the dump early this month, we will most likely dump next month.
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