BUSD dip hits Binance

January 08, 2024

 

Reading time: 7 minutes

Bitcoin whale transactions peak amid fluctuations in king coin's price

Key points:

  • Having experienced minimal fluctuations in the past three days, Bitcoin was trading at $43,892, reflecting a 0.2% decrease, at press time

  • At the time of writing, the whale transactions had dropped to around 9,400 from 34,000

News - The recent fluctuations in Bitcoin's price prompted a significant increase in transactions by large-scale investors, commonly known as whales. 

AMBCrypto's analysis revealed a notable surge in transactions exceeding $100,000, particularly on 4 and 5 January. Interestingly, the number of transactions in this range surpassed 34,000, marking the first time whale transactions have reached such levels since June 2022.

Which way are the whales going?  AMBCrypto's examination of the exchange netflow data indicated a consistent negative trend in recent days, with only a slight positive inflow of around 1,500 on 4 January. However, a detailed review of the chart disclosed that the negative impact was minimal, indicating numerous inflows.

At press time, the netflow stood at -1,174, showing no clear signals of major addresses selling off. On the contrary, there were indications of minor accumulations, hinting that the whales were looking to capitalize on the marginal price decline.

The overall trend - A closer look at Bitcoin's daily timeframe highlighted that the king coin consistently maintained a position above its short-moving average. Despite the ongoing decline, this pattern suggested that the overall trend remained positive.

U.S. SEC reissues crypto FOMO warning amid anticipation of Bitcoin ETF approval

Key points:

  • Over the years, the SEC has continuously emphasized the risks associated with FOMO-driven investments in the cryptocurrency space

  • The SEC first published the "Say no go to FOMO" blog post on 23 January 2021, amidst a thriving bull market that led BTC, ETH, and other altcoins to record highs by November 2021

News - Days before the expected approval of spot Bitcoin exchange-traded funds (ETFs), the U.S. Securities and Exchange Commission (SEC) has once again issued a warning about the risks associated with Fear of Missing Out (FOMO)-driven crypto investments. 

A word to the wise - In a 6 January update on X, the SEC's Office of Investor Education reiterated its caution to retail investors regarding the risks tied to digital assets, such as meme stocks, cryptocurrencies, and NFTs. The advisory specifically highlighted the influence of celebrities and athletes in promoting crypto assets, advising investors against making financial decisions solely based on endorsements from popular figures. 

Furthermore, the report underscored the potential volatility of assets influenced by trends and influencers, noting that initial appeal may lead to rapid losses as the market evolves.

The Bitcoin connection - Recently, senior Bloomberg ETF analyst Eric Balchunas pointed out that the majority of Bitcoin ETF applicants, having met the regulator's criteria before 29 December would likely secure approval within the week.

Hence, it came as no surprise when social media users swiftly speculated that the SEC's warning hinted at the potential approval of one or more spot Bitcoin ETFs awaiting a decision before the 10 January deadline.

Binance stablecoin sector takes a hit as BUSD market cap plummets

Key points:

  • Binance faced numerous challenges throughout 2023, impacting both the exchange and the network

  • Navigating these challenges, Binance's trajectory in 2024 will be significantly influenced by the stability of its stablecoin, network engagement, and legal resolutions

News - On 7 January, Binance's stablecoin sector experienced a significant setback, marked by a sharp decline in the market capitalization of Binance's BUSD. 

During this period, BUSD's supply dropped to less than 1 billion, marking a 95% decrease from its peak of 23.45 billion. At the time of writing, BUSD ranked as the sixth-largest stablecoin, following behind FDUSD, USDT, USDC, and DAI.

A ripple effect - The aftermath impacted BNB's network dynamics, with activity plummeting by 66.4% over the past week. At the same time, there was a 13.7% decline in network revenue, pointing to a worrisome trend in user engagement and economic throughput.

Compounding Binance's difficulties, legal complications arose. The U.S. Commodity Futures Trading Commission (CFTC) concluded a settlement with Binance's CEO, Changpeng Zhao (CZ), imposing a $150 million civil penalty on CZ and requiring Binance to return $1.35 billion in fees. Additionally, the court mandated the implementation of a corporate governance structure, intensifying regulatory oversight.

BNB's response - Despite facing legal challenges and FUD (Fear, Uncertainty, Doubt), new projects continued to launch on BNB, showcasing resilience within the ecosystem. However, BNB faced a negative market response, with a decrease in trading volume and a press time value of $299, reflecting a 2.2% decline in the last 24 hours. 

Honduras special zone officially recognizes Bitcoin as a unit of account

Key points:

  • Established in May 2020 on Roatan's northern island, Próspera ZEDE officially adopted BTC as legal tender in April 2022

  • The tax commissioner of Próspera, Jorge Colindres, expressed that the latest development would enhance the financial and monetary freedom for individuals in the region

News - Próspera, a special economic zone in Roatan, Honduras, has acknowledged Bitcoin as a unit of account. This recognition enables the use of Bitcoin to measure the market value of goods and services within the zone.

Jorge Colindres, the acting manager and tax commissioner of Próspera Zone for Employment and Economic Development (ZEDE), led the initiative. In a post on X on 7 January, Colindres explained that the goal was to enhance financial freedom for individuals and businesses operating in the area.

How to get started - To designate BTC as the unit of account, interested parties must submit a notice to Próspera's tax commission within 30 days of the relevant tax period. Colindres emphasized that this notice should specify an approved cryptocurrency exchange, such as Coinbase or Kraken.

Are there any limitations? While the development allows BTC to be used as a monetary unit for gauging the market value of goods and services in the Próspera zone, Colindres explained that the implementation of the "Final BTC Tax Payment Procedure" is presently constrained by technological limitations within its eGovernance system and external regulatory issues.

This means that, for now, entities choosing Bitcoin as their form of payment can calculate tax liabilities using BTC for internal accounting. However, when reporting to Próspera ZEDE, these liabilities have to be presented in either United States dollars or the Honduras lempira. Once the current challenges are resolved, these entities will be able to report and settle tax liabilities directly in BTC to Próspera ZEDE, according to Colindres.

Crypto scams uncovered

  • The PlexCoin scam, orchestrated by PlexCorps and founder Dominic Lacroix in 2017, involved an unregistered ICO with PlexCorps falsely claiming a 1,354% profit in under a month. Authorities intervened, resulting in legal actions and fines, underscoring the dangers of fraudulent ICOs.

  • BitClub Network, a cryptocurrency mining pool, operated as a Ponzi scheme from 2014 to 2019, luring investors with promises of high returns. In 2019, three individuals associated with BitClub were indicted for a $722 million fraud.

  • Japanese cryptocurrency exchange Coincheck experienced a major hack in January 2018, with hackers exploiting vulnerabilities to steal around $530 million worth of NEM tokens. The incident prompted increased regulatory oversight and a focus on enhancing security in the crypto industry.

Top 3 coins of the day

Solana (SOL)

  • The $78 level which previously acted as a resistance during Solana's upward trend has now become a key support level for the crypto

  • Despite the ongoing decline, Solana has experienced a significant uptick in its daily transaction volume, reaching its highest level since December 2022

What you should know - Over the weekend, SOL slipped below $100, putting an end to the rally that started in October 2023. Trading at $94.25 at press time, the altcoin's value had declined by 10.1% over the past seven days and 0.9% in the last 24 hours. The MACD noted several red histograms below the half-line as the lines headed south to reflect strong selling pressure. This suggests the price may maintain a descending trend for a while which may be followed by a bullish breakout soon. 

Ripple (XRP)

  • XRP experienced a significant price drop following a sharp sell-off in Bitcoin on 3 January, with BTC losing 11.18% in a day and XRP falling by as much as 21% before rebounding

  • A report published by leading digital-asset investment firm CoinShares on 3 January, noted that fund flows into XRP investment products doubled between 2022 and 2023

What you should know - Until last week, XRP had found stability on the charts. However, following an extended period of sideways trading, XRP experienced a downturn, falling below the $60 level. At press time, the crypto was trading at $0.56 after falling by 0.1% in the last 24 hours. Moreover, the 8.6% decline over the past 7 days indicated significant bearish momentum. The RSI registered a reading of 37 below the neutral 50-levels, suggesting that sellers were in command.

Cardano (ADA)

  • In December, Cardano's ecosystem was buzzing with activity, experiencing its highest developer engagement in the last 30 days

  • In the past two weeks, whales acquired 14 million ADA, causing the whale-held supply to increase from 15.96% to 19.36%

What you should know - After trading within a narrow range for nearly a month, the ADA price triggered a fresh bearish move, losing by over 30% since the beginning of 2024. ADA depreciated by 2.1% over the last 24 hours, with the altcoin trading at $0.51 at press time. The fallback was confirmed by the Signal Line (orange) crossing over the MACD line (blue). In fact, the same flashed red signal bars below the half-line, highlighting strong bearish momentum.

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