Bitcoin Remains Bearish Following Binance Lawsuit, but Institutional Money Has Come Back

Observers are concerned that the lawsuit could worsen the liquidity issue that has been affecting the crypto markets since the FTX collapse in November. According to Morgan Stanley, Binance was responsible for 81% of the Bitcoin trading volume on centralized exchanges in February. The CFTC case document suggests that a single trader from Chicago was responsible for 12% of the exchange’s total trading volume.

Crypto Liquidity Concerns Amid Binance Lawsuit

Noelle Acheson, the author of Crypto is Macro Now, warned that a reduction in liquidity could increase volatility and deter large players from participating in the market. Acheson added that if market makers retreat from trading on Binance and the exchange’s U.S.-based trading desks are forced to cease operations, the liquidity in an already thin market would be further reduced.

Bitcoin Price Struggles at $27,000

Bitcoin (BTC) has been stuck around \(27,000 at the time of writing, marking a -2.66% drop over the past 24 hours. "In the near term, we expect a pullback for Bitcoin, noting it has an overbought downturn in the daily stochastics," analysts at Fairlead Strategies said in a note on Monday. These analysts also viewed the former resistance around \)25.200 as the short-term initial support for Bitcoin.

Disinflationary Effects on Crypto Market

In terms of macroeconomics, Chris Burniske, a partner at Placeholder, predicted that the banking crisis would result in disinflation rather than hyperinflation. He explained that the Federal Reserve’s Bank Term Funding Program is aimed at bolstering bank balance sheets, rather than promoting consumer spending. This disinflationary effect is expected to incentivize the Federal Reserve to reduce interest rates.

Institutional Investors Return to Crypto Market

Institutional investors may share the same view as they started to come back. According to CoinShares, a European cryptocurrency investment firm, investment products in digital assets experienced significant inflows of \(160 million last week. This marks a significant reversal after six weeks of outflows totaling \)408 million. Although the inflows occurred later than the broader crypto market’s movement, many investors are increasingly viewing the digital assets sector as a “safe haven” amid growing concerns over the stability of traditional finance.

Large players invested \(128 million in Bitcoin products for the first time last week thanks to this sentiment. However, not all investors agreed with the point, as short-Bitcoin products received inflows of \)31 million. Despite not being the best-performing product from a price perspective, short-Bitcoin remains the investment product with the highest inflows year-to-date.

BNB Price Suffers as XRP Gains Traction

In contrast, Ethereum (ETH) products saw outflows of $5.2 million last week, marking the third week in a row with outflows. The CoinShares report suggests that investor anxiety over the Shanghai upgrade, set to take place on April 12, is responsible for this trend.

Due to Binance’s recent trouble with regulators, Binance Coin (BNB) experienced the most significant drop among the top 10 cryptocurrencies, with its ratio compared to Bitcoin declining to 0.0115, a level not seen since July 2022. Additionally, Binance CEO Changpeng Zhao’s net worth fell seven spots from 46th at \(27.9 billion to 51st at \)25.8 billion, according to the Bloomberg Billionaire Index.

XRP Enjoys Growth Amid Ripple’s Legal Optimism

On the other hand, Ripple (XRP) was the only non-stablecoin cryptocurrency among the top 10 to record an over 2% gain during Tuesday’s afternoon trading in Asia. At the time of writing, it is trading with a 4.79% increase over the past 24 hours.

XRP’s rise is likely due to investors’ expectations that Ripple will succeed in its ongoing legal dispute with the SEC. Ripple Labs President Monica Long expressed optimism last week that the court will rule in the company’s favor. Thanks to the fundamentals, XRP’s social dominance has grown to its 50-week high as the price reached $0.49 today.

Summary of Market Events and Price Action

As a summary of today’s events and price action in the market, it is crucial to note the following key points:

1. The ongoing Binance lawsuit has led to concerns regarding liquidity in the crypto market.
    
2. Bitcoin (BTC) is struggling around the $27,000 mark, with analysts predicting a pullback in the short term.
    
3. The banking crisis is expected to have a disinflationary effect on the market, which could lead to reduced interest rates.
    
4. Institutional investors are returning to the crypto market, with significant inflows seen in Bitcoin products.
    
5. Binance Coin (BNB) has experienced a significant drop in value, while Ripple’s XRP enjoys growth due to optimism surrounding its legal dispute with the SEC.

These developments in the market provide valuable insights into the current state of cryptocurrencies and the factors influencing their prices.

Top altcoin gainers and losers

Gainers:

Flare FLR (+21.72%)

TrueUSD TUSD (+9.44%)

GMX GMX (+8.51%)

Losers:

Mina MINA (-8.52%)

Arbitrum ARB (-7.27%)

Fantom FTM (-5.79%)  

NFT Market Map

When it comes to trading volume, Otherdeed (+238.56%) has been a clear winner today following the introduction of a new 2D game in the ecosystem, Legends of the Mara. Bored Ape Yacht Club, the 3rd collection on today’s NFT leaderboard, also saw a +91.88% increase in trading volume thanks to the effect.

Nakamigos (+24.63%) surpassed BAYC as the collection is creating more noise on social media. NFTstatistics.eth, Director of Research at PROOF, spotted a sale where a 1-trait ghost Nakamigos NFT was sold for 16 ETH, which is a nearly 870% surge from its floor price.