Crypto Labs Market Watch for Apr. 13th
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1. Bitcoin Plunges to $66K, Altcoins Tumble 10–15% on Ugly Day for Risk Assets
Looking beyond today’s decline, investors may expect continued market weakness due to the tax season, Ryze Labs said in a report.
Cryptocurrencies tumbled Friday as risk-off sentiment in traditional markets amid flared-up geopolitical risks spread over to digital assets.
In fast downward afternoon action during U.S. trading, bitcoin (BTC) plunged below $66,000 after having challenged the $71,000 level just hours earlier. At press time, bitcoin had bounced back to $66,700, down more than 5% over the past 24 hours.
Ether (ETH), the second-largest cryptocurrency by market cap, fell as much as 12% to $3,100 before a modest bounce cut the decline to 8%.
Smaller cryptos suffered even heavier losses in the panicky action. The broad-market dropped nearly 10%, with Cardano’s ADA, Avalanche’s AVAX, bitcoin cash (BCH), filecoin (FIL) and aptos (APT) plummeting 15–20%.
The drawdown triggered the largest leverage washout in a month, liquidating some $850 million of leveraged derivatives trading positions across all digital assets, CoinGlass data shows. Some $770 million of those positions were longs betting on rising prices, caught off-guard by the sudden decline.
2. Bitcoin price falls to $65K as $400M crypto market liquidation rocks BTC and altcoins
Bitcoin price sees sharp sell-off as today’s downside move liquidates heaps of BTC and altcoin traders who were caught offside.
Bitcoin price saw a sudden 5% drawdown on April 12 as traders with leveraged positions in Bitcoin and other cryptocurrencies incurred over $400 million in losses within one hour.
BTC dropped 5% from $68,341 to as low as $65,110 in less than 60 minutes in late New York session trading hours on April 12.
Ether, the second largest crypto by market capitalization, followed in Bitcoin’s footsteps, falling 8% from an opening of $3,553 to trade at $3,226.
Futures market data from Coinglass show Bitcoin’s flash crash resulted in more than $417 million in leveraged positions wiped out within one hour, with over $77.93 million in Bitcoin longs and more than $63.35 million in Ether longs accounting for the bigger part of that figure.
The most short and long liquidations occurred on Binance, totaling $171 million, while crypto exchange OKX traders saw combined losses of $158 million.
Coinglass also reveals that within the past 24 hours, total liquidations reached $860 million among 270,993 traders.
The crash occurred as U.S. stock markets dipped during the U.S. trading session a few days after new data showed that inflation accelerated for a third consecutive month. The hotter-than-expected CPI print further dashed hopes for Fed rate cuts this year amid fears that progress may be stalling in taming elevated price levels.
JPMorgan Chase CEO Jamie Dimon warned on April 12 that “persistent” inflation, geopolitical tensions and the Fed’s Quantitative tightening efforts threaten an otherwise positive economic outlook.
“We have never truly experienced the full effect of quantitative tightening on this scale,” the head of the largest U.S. bank by assets said in a first-quarter earnings results announcement, adding that the market is likely to be weighed down by“ “persistent inflationary pressures, which may likely continue.”
3. China has a Trojan Horse in US Bitcoin mining infrastructure
China holds an alarming amount of power over Bitcoin miners in the United States. Congress should act to scale back the country’s influence.
Cryptocurrencies are rapidly becoming a critical piece of the United States economy and financial system. The value of Bitcoin has surged thanks to exchange-traded funds (ETFs) bringing access to a huge swath of new consumers. This is generally good news.
However, the rise of Bitcoin also brings with it the need for increased regulatory guardrails, similar to other emerging areas of tech, such as AI. In a globally connected world, where national security interests are thrust into the forefront with each new disruptive technology, risks around critical network and infrastructure vulnerabilities require urgent attention.
The threat of China continues to emerge at the center of these discussions. The U.S. has answered perceived technology threats — from companies like Huawei, TikTok, and Chinese EV manufacturers — with decisive actions. The risk within cryptocurrencies is even more alarming because Bitcoin miners represent a potential silent, sentient hardware layer integrated directly into U.S. energy and telecom infrastructure.
Given the scope of this risk, it is beyond time for regulators to act and ensure Chinese crypto mining technology has zero chance to cripple vital U.S. utility and financial systems.
Bitcoin mining is the process by which new Bitcoins are entered into circulation. It is also the mechanism that secures the network by validating and confirming all transactions to the blockchain, Bitcoin’s underlying public ledger. Miners compete to solve complex mathematical problems; the first to solve the problem gets to add the next block to the blockchain and is rewarded with newly minted Bitcoins and transaction fees.
Requiring substantial computational power and energy, Bitcoin mining is executed through sophisticated mining rigs — high-performance computing systems, powered by advanced semiconductors called ASICs. China dominates the supply of ASICs for Bitcoin mining, supplying 98% of today’s chips, mainly from a few large manufacturers including a company called Bitmain. These chips designed in China are manufactured by TSMC, using their latest and most advanced manufacturing process (3nm).
4. Hong Kong Could Approve Spot Bitcoin, Ether ETFs as Early as Monday: Bloomberg
Expectations for Hong Kong to approve the ETF products are seen as one of the biggest market-moving events for the cryptocurrencies in the near term.
Hong Kong may approve spot bitcoin and ether ETFs as soon as Friday, with possible trading by the end of the month, Bloomberg reported, citing sources.
The approval timeline isn’t fixed and could be changed at the last minute, the sources said.
Hong Kong could approve spot bitcoin (BTC) and ether (ETH) exchange-traded funds as early as Monday, Bloomberg reported, citing two people familiar with the matter.
If listing details are worked out in time with Hong Kong Exchanges & Clearing (HKEX), the products could be launched by the end of the month, the report said.
Harvest Global Investments, a major asset-management company in China, which was reportedly the first to apply for a spot bitcoin exchange-traded fund (ETF), and a product by Bosera Asset Management (International) Co. and HashKey Capital, could be the first to get approvals.
The approval timeline isn’t fixed and remains subject to last-minute changes, the people said.
Hong Kong’s approval of the ETF products is seen as one of the biggest market-moving events for cryptocurrencies and could establish Hong Kong as Asia’s leading digital asset hub.
While the U.S. approved spot-bitcoin ETFs in January, leading to a record price rally that has seen bitcoin hitting $73K, it hasn’t yet approved ether ETFs.
In fact, expectations are muted for the U.S. to approve spot-ether ETF products.
Hong Kong’s Securities and Futures Commission (SFC), the city’s market regulator, declined to comment.
Harvest Global Investments, Bosera Asset Management, Hashkey and HKEX, didn’t immediately respond to CoinDesk’s requests for comment sent after business hours on Friday.
5. Crypto Biz: Tokenization spikes, SEC delays Bitcoin ETF options, PayPal’s stablecoin
This week’s Crypto Biz explores the rise of tokenization markets, PayPal’s stablecoin, SushiSwap’s move to a “Labs model,” and the U.S. SEC’s decision to defer Bitcoin ETF options.
United States Treasurys tokenized on public blockchains surpassed $1 billion as traditional financial firms continued to load securities on-chain amid a prolonged period of elevated interest rates.
Data compiled by 21.co and Dune Analytics shows that tokenized government securities reached the $1 billion mark in assets on March 28, distributed across 17 products. A majority of the assets are based on the Ethereum, Polygon and Stellar networks.
“The growth in tokenized treasuries on public blockchains like Stellar is a result of more asset issuers recognizing blockchain technology makes good business sense,” Paul Wong, director of product, CBDCs and institutions at the Stellar Foundation, told Cointelegraph.
Investment firm Franklin Templeton is among the companies tokenizing assets, with over $360.1 million in assets and 33.6% of the market share through its Franklin OnChain U.S. Government Money Fund. The fund, launched in 2021, is based on the Polygon and Stellar blockchains.
By volume, tokenized securities represent the largest asset class on the Stellar network, with a total tokenized market cap of over $430 million as of late March. “Blockchain is here to stay and is the future. We expect to see exponential growth in tokenization in the next few years,” said Wong.
Aside from the rise of tokenization markets, this week’s Crypto Biz explores PayPal’s stablecoin, SushiSwap’s move to a “Labs model,” and the U.S. Securities and Exchange Commission (SEC) delaying a decision on options trading on spot Bitcoin exchange-traded funds (ETFs).
6. Binance Labs shifts focus to Bitcoin DeFi, MarginFi sees $200M of outflows: Finance Redefined
Solana-based DeFi protocol MarginFi saw hundreds of millions in outflows after its CEO rage-quit amid growing controversies and accusations of failed promises.
Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you the most significant developments from the past week.
Like Ethereum’s peak era in 2017, Solana is facing a similar hurdle in network congestion that has lasted almost a week, leading to a high transaction failure rate.
Solana developers have now set April 15 as their target date to resolve the issue, calling it a bug rather than a design flaw.
Binance Labs has shifted its DeFi focus toward Bitcoin by investing in Bitcoin-native restaking protocol BounceBit.
In other news, withdrawals from the Solana-based DeFi protocol MarginFi grew over $190 million amid an apparent management meltdown and claims from competitors that it hasn’t met its promises.
Solana devs target April 15 for failed TX fix — It’s “not a design flaw”
Solana developers are targeting April 15 to implement a fix for an “implementation bug” that recently caused the transaction failure rate on Solana to skyrocket.
“Solana’s current issue is not a design flaw; it’s an implementation bug,” stressed Mert Mumtaz, the CEO of Helius Labs, a blockchain infrastructure firm that provides back-end support exclusively to the Solana network.
Crypto Labs Team
April 13th, 2024
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