Bitcoin flash crashed yesterday following reports that Coinbase is investigating an issue in which its API and website were not functioning properly. Bitcoin’s price fell around $1,400 within minutes before recovering back towards the $13k level. Overnight, the price action bucked the recent bull trend as crypto market participants took profit following days of gains. The move lower also comes ahead of the impending expiration of the CME June futures contract. The curve remains in contango, although the spreads have narrowed significantly.
The amount of USDT that is flowing into the Ethereum blockchain has stabilized and the total supply (Tether in Circulation on ETH) currently stands at 1,000,057,493.363429 USDT. As a guide, ETH based USDT can access any and all smart contracts, including decentralized exchanges (DEX) as well as other open finance dapps. The significance of this trend should not be underestimated since further traction towards the Ethereum blockchain will give another boost to an already buoyant DeFi market. Despite the surge in ERC-20 USDT flow, the performance of native centralized exchange tokens continues to best its DEX competitors. For example, Binance Coin (BNB) is up nearly 500% year-to-date, while the heavyweight 0x (ZRX) is only up 5%, and Komodo has risen 54%.
Over 60% of this supply is held by Binance and, as alluded to in the past, the cryptocurrency market has a tendency to get hooked on supply growth and withdrawal symptoms once printing pauses tend to lead to aggressive position unwinds. Whether the market is due for a crypto version of Taper Tantrum (the Federal Reserve’s tactic to unwind unconventional monetary policies) remains to be seen but the underlying network fundamentals need to improve dramatically. Concerning the DeFi market, the amount of ETH locked in the MakerDAO credit ecosystem continues to decline and currently stands at 1.415% vs 1.424% yesterday and 2.11% at its highs earlier this year. Interestingly, “draw” function which allows holders to take loans in Dai from your CDP, was at its highest level in 3 months yesterday, also topping the amount used during the initial price pump in early April.
Elsewhere, Litecoin is underperforming its market peers yet again, as smart money is taking profit ahead of the widely publicized mining reward halving. On Aug. 8, the reward for mining on Litecoin’s blockchain will be halved from 25 coins to 12.5 coins per block.
Finally, the Tron Foundation has announced a $20 million buyback plan and the buyback is purportedly part of an initiative to bolster community activity and market stability. The buyback is set to last for a year in the form of several batches totaling $20 million.
Thank you for reading,
The BeQuant’s Analytics team