Bitcoin funds are bleeding coins even as U.S. bank failures fuel expectations of an early Federal Reserve pivot in favor of liquidity easing. Usually, if the Fed doesn’t raise rates aggressively like it has been doing, risky assets like bitcoin benefit, but the opposite is occurring with the bitcoin funds. Data tracked by ByteTree Asset Management shows the number of coins held by close-ended funds, spot and futures-focused exchange-traded funds in Europe, the U.S. and Canada has declined by 16,560 BTC ($409 million) this month, reaching a 17-month low of 826,113 BTC. ETFs and other investment vehicles that allow taking exposure to bitcoin without having to own the cryptocurrency are widely considered a proxy for institutional activity.
ByteTree Asset Management
Bankrupt cryptocurrency exchange FTX transferred $2.2 billion to founder Sam Bankman-Fried through various entities, the firm’s new management said. A total of $3.2 billion was paid to Bankman-Fried and other key employees, according to a financial report filed Wednesday. The next largest beneficiary after Bankman-Fried was Nishad Singh, FTX’s former director of engineeing,who received about $587 million. In February, Singh pleaded guilty to charges including fraud and conspiracy for his role in FTX’s collapse. The payments were made predominantly from the Bankman-Fried-owned trading firm Alameda Research, whose precarious finances set the wheels in motion on FTX’s collapse in November.
U.S. Securities and Exchange Commission Chairman Gary Gensler is doubling down on his opinion that proof-of-stake tokens could meet the definition of securities under the Howey Test, thus bringing them under his agency’s regulatory authority. Speaking to reporters after a commission vote on Wednesday, Gensler said securities laws could be triggered because investors anticipate a return when they purchase tokens underpinned by a proof-of-stake consensus mechanism. The Block first reported the news.
Market Insight: Bump Up for Bitcoin’s Share
TradingView
The bitcoin dominance rate – the leading cryptocurrency by market value’s share of the total crypto market – has reached a nine-month high of 45.5%, according to data from charting platform TradingView.
BTC.D last reached over 45% on June 25, 2022.
The recent surge comes amid a turbulent two weeks in crypto markets with the failure of crypto-focused Silvergate Bank and Signature Bank (SBNY) and a near meltdown of the wider banking sector.
Bitcoin dominance has historically risen during periods of high stress because BTC is considered a less-volatile asset than most other cryptocurrencies.
The chart by CryptoCompare shows that bitcoin’s 1% market depth for BTC/USD pair or collection of buy and sell offers is within 1% of the mid-price or the average of the bid and the ask/offer prices.
The market depth tanked to fresh multi-month lows over the weekend after USDC lost its dollar peg, making it harder for traders to execute large orders at stable prices.
“Coinbase’s BTC-USD liquidity (which is a unified market for USD and USDC on Coinbase) saw a sharp decline of its 1% market depth which was more severe than when FTX collapsed. 1% market depth fell from 846 BTC on the 10th to 417 BTC on the 11th, a 50.7% decline,” CryptoCompare said in a report on Tuesday.
Deterioration in liquidity, as measured by market depth, means a few big orders can trigger outsized price moves in either direction.
– Omkar Godbole
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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.
