Crypto Weekly: Shaky markets while stablecoin adoption increases
Summary: The sharp drop in the crypto space in the beginning of the week triggered all-time high trading volumes in Bitcoin. Furthermore, big news were out from the US Treasury regarding the use of stablecoins.
For the first time, Bitcoin experienced a drop of $10,000 in under 48 hours
From being traded at approximately $41,000 on Sunday, Bitcoin fell to a low of $30,500 yesterday evening according to TradingView. Rumours started to circulate shortly thereafter on what contributed to the drop, and it seemed to be a hefty sell-off by miners as well as others who were taking in profits from the recent surge. This sell-off contributed to panic to some extent across the whole cryptocurrency market.
Bitcoin volume at its all-time-high upon increased volatility
The sell-off resulted in all-time highs in the traded Bitcoin volume as it hit $11 billion based on the eight biggest cryptocurrency exchanges, beating the 2017 bull run. There has been a lot of talks about institutional interest in this circle. However, it also looks like more retail investors are finding their way to the space as the PayPal volume for cryptocurrencies also hit a new high yesterday of $242M.
Bakkt will not support XRP, making XRP’s legal issues worse
Yesterday, Intercontinental Exchange’s subsidiary called Bakkt said that it will go public through a SPAC deal. Bakkt is planning to launch an app for cryptocurrency trading in March. That app will however not let clients trade XRP, the fourth biggest cryptocurrency measured on market capitalization. Without Bakkt having disclosed the reason behind this decision, it is most likely due to XRP’s legal issues. At the end of December 2020, XRP was sued by the Securities and Exchange Commission in the US for assumingly having issued more than $1 billion in tokens without registering it as a security. As many cryptocurrency exchanges and fund managers are not legally allowed to handle securities, an avalanche of delisting’s followed as Bitstamp, Coinbase, Binance.US and more exchanges delisted the cryptocurrency, contributing to a sharp price decline. Once again, it shows the power that the regulators have on the development of respective cryptocurrencies. A power, which should never be underestimated.
US Treasury allows US banks to use public blockchains and USD stablecoins
The power of regulators can also contribute positively which was demonstrated last week in the stablecoin space. The Office of the Comptroller of the Currency under the US Treasury stated last week that US-based banks are allowed to use stablecoins and blockchain for settlements and payments. The CEO and co-founder of Circle, Jeremy Allaire, who issues the second-biggest stablecoin called USDC together with Coinbase, stated that this is a “huge win” for crypto and stablecoins as it paves the way for the use of stablecoins as a mainstream payment medium. Stablecoins experienced significant growth last year where the Tether supply grew from $4.1B to $21B while the USDC supply grew from around $520M to $4B at the end of the year.