The latest moves in crypto markets, in context By Lyllah Ledesma, CoinDesk reporter Was this newsletter forwarded to you? Sign up here. |
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Welcome to Monday! Here's what's happening in crypto today: |
- Paxos has said it will stop minting BUSD following legal threat from the SEC.
- Bitcoin and ether are both trading down on the day.
- Restrictive crypto rules for EU banks were confirmed in a legal draft.
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CoinDesk Market Index (CMI): 1,022 −2.4%
Bitcoin (BTC): $21,688 −0.9%
Ether (ETC): $1,491 −2.7%
S&P 500 futures: 4,106.75 +0.2%
FTSE 100: 7,912.95 +0.4%
Treasury Yield 10 Years: 3.74% +0.1 |
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Stablecoin issuer Paxos will stop minting new Binance USD (BUSD) tokens following the threat of legal action from the U.S. Securities and Exchange Commission (SEC). The WSJ reported on Sunday that the SEC intended to sue Paxos for selling BUSD as an unregistered security. This came only days after CoinDesk reported that Paxos was under investigation by the New York Department of Financial Services. BUSD is a Binance-branded stablecoin issued and managed by Paxos. Following the SEC report, Binance said it would be reviewing projects in markets where regulatory uncertainty could cause difficulties for users. |
Paxos CEO Charles Cascarilla (CoinDesk) |
A modest weekend rally in bitcoin (BTC) and ether (ETH) was snuffed out by the Paxos/SEC report on Sunday evening. Bitcoin had managed to claw back above $22,000, but the price fell several hundred dollars in the minutes after the report hit, and early Monday morning was trading around $21,700, roughly where it closed the week last Friday. Wall Street equity futures steadied Monday ahead of the release of U.S. consumer price data on Tuesday. EU banks would have to place the maximum possible risk weight on crypto assets under a draft law published by the European Parliament on Friday. The planned rules could determine how the traditional financial sector engages with digital assets. Under the proposed rules, as previously reported by CoinDesk, banks would have to disclose their direct and indirect exposure to crypto, while the European Commission prepares more detailed guidelines for the sector. |
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Market Insight: Crypto and Nasdaq Align |
The correlation implies increased sensitivity of cryptocurrencies to macro factors. (CoinDesk/TradingView) |
The correlation between the crypto market and the tech-heavy Nasdaq equity index has turned positive, indicating a renewed focus by digital asset investors on risk appetite on Wall Street. The 90-day correlation coefficient between the crypto market's total capitalization with Nasdaq has risen from -0.12 to 0.74 in four weeks, reaching the highest since early November, according to data sourced from charting platform TradingView. In other words, the crypto market is again moving in tandem with technology stocks. On days when technology shares trade higher, cryptocurrencies are likely to do the same. Conversely, a decline in technology stocks could drag the crypto market lower. |
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The chart shows the yield on the U.S. two-year treasury note has jumped more than 30 basis points to 4.54% this month, reaching the highest since Nov. 30. A continued move higher might push risk assets, including stocks and cryptocurrencies, lower. When yields rise, stocks tend to fall in value because of lower future earnings. Cryptocurrencies tend to move in line with stocks.
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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
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