CoinLoan Weekly: Downturn deepens, BTC whale exodus, stablecoin bill
The Fed’s decision to raise interest rates by 0.5% triggered a short-lived rally. Following an uptick to $39,874.56 on Wednesday, May 4, BTC plummeted and became engulfed in red. After losing over $7,000 in total, it crashed below $32,000.
The Fear & Greed Index nosedived to 11, reflecting extreme fear. Crashing stock markets and the decoupling of TerraUSD from its peg contributed to the sentiment. Analysts expect further volatility and sell-off. On Monday, May 9, BTC collapsed to its 7-day low of $30,709.40 – less than half of the all-time high.
As of now, BTC is trading at $31,601.19, with a 24-hour drop of -8.6% and a 7-day plunge of -18.0%.
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The headwinds for ETH were just as strong. After the peak of $2,955.81 on Wednesday, May 4, it showed consistently bearish dynamics. Along with BTC, ETC accounted for the majority of market liquidations.
On Monday, May 9, the decline sped up, and the price reached the 7-day low of $2,254.96. Over the week, ETH lost nearly as much as BTC. The last time it traded this low was in July 2021.
As of this writing, ETH is at $2,320.71, with a 24-hour slip of -9.4% and a 7-day loss of -18.1%.
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For XRP, the week was only slightly less damaging. Compared to BTC and ETH, the peak was delayed – the price rose to $0.653172 on Thursday, May 5. Subsequently, it fell in lockstep with the biggest cryptocurrencies.
On Monday, May 9, XRP collapsed to $0.487523, its lowest low since July 2021. The cryptocurrency is now over 84% below its all-time high, with 65.9% lost over the past 12 months.
As of now, XRP is trading at $0.510114, with a 24-hour change of -10.9% and a 7-day fall of -16.3%.
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As the market bleeds red, Bitcoin whales continue fleeing
The ranks of Bitcoin whales have shrunk back to the levels seen in early 2022. Apparently, they have been transferring holdings to centralized exchanges and liquidating them to prepare for a longer downtrend.
On Monday, May 9, the $BTC exchange inflow reached a 3-month high of over 1.7 million coins. Whale Alert tweeted about 12,851 BTC transferred between unknown wallets. Meanwhile, Gemini processed a withdrawal of 4,700 BTC and a transfer of 19,000 BTC to Binance. According to Watcher Guru, the cumulative evaluation of all cryptoassets fell by $210 billion – to $1.35 trillion.
The market has lost over 10% of its value in the past 24 hours. More than half of these losses were due to BTC and ETH liquidations. The Fear and Greed index has plunged to 11 for the first time since January 23.
Some experts suggest the sell-offs may have come from short-term holders who bought BTC in early 2022, when it was trading around $34,800. The overwhelmingly poor sentiment has not impacted the number of daily transactions, as YCharts shows.
While the market is bleeding red and investors are losing confidence, some remain hopeful. According to William Clemente, lead insights analyst at Blockware Solutions, hodlers should bide their time as Bitcoin will eventually turn green. Still, as it is responding to broader economic conditions, recovery may be rocky.
TRUST act: US at the forefront of stablecoin regulation
The US is poised to become the first Western nation to fully integrate stablecoins into the banking and financial ecosystems. The new TRUST Act, which was introduced by Republican senator Patrick Toomey, lays out the rules for issuers in the country.
The draft is aimed at boosting the transparency, security, and utility of USD-pegged stablecoins for everyday payments. It requires quarterly attestations, clear asset redemption policies, and regular disclosure of the assets backing the stablecoins.
If the Stablecoin Transparency of Reserves and Uniform Sale Transactions Act of 2022 becomes law, the Office of the Comptroller of the Currency (OCC) will be authorized to create a new type of license. Issuers will also be able to secure a state money transmitter license or a conventional bank charter. However, the OCC license will give them access to larger amounts of liquidity via the Fed’s master account system.
In April 2022, stablecoins became a legal means of payment in the UK. The US government has been observing these assets for quite a while. The TRUST Act follows Joe Biden’s executive order on the oversight of the industry, which was met with a chorus of approval.