Category Archives: Bitcoin
Bitcoin Loses 10% on the Week as Memecoins Tumble – CoinDesk
Bitcoin (BTC) has plunged more than 10% over the past 7 days to a two-month low just above $26,000 alongside a sizable reversal in the previous red-hot memecoin sector.
The worlds largest cryptocurrency traded at around $26,300 at press time, a level not seen since March 17. Bitcoins high for the week came on Wednesday morning when it rose to $28,300 following softer than expected CPI data on Wednesday.
Bitcoin might break below $26,000 over the weekend but its well bid right now, said Laurent Kssis, crypto advisor at CEC Capital. Clearly there are no fundamentals holding BTC up any longer and traders are concerned but it feels a short term play to increase BTC holdings at these lower levels, he added.
Oanda analyst Ed Moya believes bitcoin is still subject to further downside pressure until the U.S. sees regulatory clarity.
Ether (ETH) was also lower for the week, though it did outperform bitcoin by a bit. Its currently at $1,770 versus its weekly high of $2,020 touched last Saturday.
Helping to sour the mood in bitcoin were tumbling prices for some memecoins, notably pepecoin (PEPE), which is now lower by more than 60% over the past week of trade. The new token based on pepe the frog debuted on April and quickly rose to more than a $1 billion valuation. Thats now been trimmed to roughly $560 million.
Other memecoin decliners included dogecoin (DOGE) and Shiba Inu (SHIB), each of which lost about 11% over the last 7days.
"The hype of meme coins is usually exciting, but often followed by a market crash, similar to what we saw with DOGE and SHIB two years ago, said Youwei Yang, chief economist at publicly traded bitcoin mining company, BTCM. The market correction for memecoins this week is largely due to the calm down of the FOMO (fear of missing out) sentiment with these new memecoins.
Altcoins were not spared in the selloff, with Aptos (APT), shedding 20%, and Filecoin (FIL) and Aribitrums (ARB) each off about 17%.
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Bitcoin Loses 10% on the Week as Memecoins Tumble - CoinDesk
As Bitcoin Scales, We Need Better Custodial Solutions – CoinDesk
Crypto unintelligentsia discourse has been set aflame by this weeks Big Crisis in Bitcoin.
Until recently you could have sent a bitcoin transaction rather cheaply, probably at a fee rate of 1 satoshi per vByte (equivalent to a fraction of a cent). Now, with the rise of the use of non-fungible token-like inscriptions and the BRC-20 token standard on Bitcoin, normal fee rates are comparatively absurd. At time of writing, getting a bitcoin transaction sent in a reasonable time period would cost something like 100 satoshis per vByte.
All things considered, its actually still pretty cheap but its way more expensive than bitcoiners are used to. And so, people are upset. The thing is, they are upset not because fee rates are high, but because of why fee rates are high.
See, the Bitcoin blockchain has always had scarce blockspace. When billions and billions of people want to use bitcoin will it become too expensive to use? has always been an open question about Bitcoin. It was even a central point of contention during the Blocksize Wars in 2015 to 2017 which led to the introduction of Segregated Witness (SegWit) to Bitcoin and the Bitcoin Cash hard fork.
(Of note: SegWit solved for transaction malleability and opened the door to our most recent reason for fees going up; funny how that works).
This time around, bitcoin fees have skyrocketed because a lot more people want to use bitcoin. And not to send permissionless, sound money to others or because they want to store wealth, but instead to put monkey pictures on the Bitcoin blockchain and speculate on tokens.
Blasphemous. Bitcoin should be used for financial transactions, hence the hullabaloo.
Putting aside the moralistic argument of what Bitcoin should be used for, bitcoiners have never really had a good response to how the network should handle periods of time when transaction fees spike. Canned answers that people will just pay for the blockspace or the free market will figure it out are setting up a world where the only people who are able to afford to transact on the network are the Bitcoin Rich.
Yuck. So much for unseating the rent-seekers.
Of course, high bitcoin fees have some potential solutions. The most commonly cited solution is Bitcoins Lightning Network, which has been pinpointed as a serviceable means to send bitcoin quickly and cheaply. When youre already on-boarded and using the Lightning Network (and you know what youre doing), its absolutely great. Transactions feel magic. Theyre fast and cheap (when they dont fail).
But the problem is you cant get to layer 2 without sending initial transactions on layer 1, in this case the currently comparatively expensive Bitcoin blockchain. Its just like you cant get to the second story of most buildings without first stepping into the first story. In both cases, you can just wait until fees go down or until the elevator banks free up (or take the stairs, I guess?). But what if fees dont go down? What if people keep piling into the building youre in?
One way to solve this could be through third-party custody. Thats like your friend setting up a zipline from another building to the second floor through a window they opened for you so that you can get to the second floor without ever touching the first floor.
Doesn't it feel dirty though?
Unfortunately, the current design of Bitcoin probably doesn't allow for the entirety of the world to efficiently onboard through layer 1. Maybe the big philosophical discussion around being financially self-sovereign ends for most because it really is difficult to be fully self-sovereign, even with bitcoin.
Our future conversations around bitcoin should then probably focus on one thing: trade-offs.
Maybe it's fine that I use my bitcoin in a custodial way because it's easier for me, and you use it non-custodially. Fine. Maybe Im wrong and youre right. Maybe it's none of your business how I use my own (or, rather, my custodians) money.
The point is: we should be more open to discussing custodial solutions to our problems no matter how dirty it might make us feel. And to that end, applying some custodial products in your financial or bitcoin life need not bar you from using non-custodial products.
You can use both. We just deserve more clarity and options when it comes to these particular trade-offs.
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As Bitcoin Scales, We Need Better Custodial Solutions - CoinDesk
If Bitcoin Cant Handle a Few JPEGs, How Can It Handle the World? – Yahoo Finance
Many bitcoiners have been up in arms about high fees amidst a surge in new activity on the original blockchain. Fees, which are set dynamically by a competitive bidding process, spiked to a staggering $30.19 for a simple bitcoin transaction on May 8, after hovering around $2 since July of 2021 nearly two years.
The situation is dire enough that some bitcoiners, particularly so-called maximalists, have gone so far as proposing censorship of BRC-20 tokens and other assets based on the ordinals issuance method. Those assets use new features to inscribe data in bitcoin transactions, and appear to be driving the price spike. Theres an immense amount to be said about the moralistic debate around BRC-20 issuance, but in one surprising development, maximalist figurehead Michael Saylor (the former chief executive of MicroStrategy) has now declared their emergence bullish.
This article is excerpted from The Node, CoinDesk's daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.
Leaving aside the question of what Bitcoin is for, theres a much more straightforward takeaway here: Bitcoin isnt scaling, and blaming ordinals doesnt change that fact.
The chain would be facing the same scaling issues if only a slightly larger fraction of the world were using it for monetary transactions. That means the BRC-20 kerfuffle, ironically, is ultimately a blow to the very maximalist vision held by those currently railing against non-monetary uses of bitcoin.
The explosion of interest in BRC-20 tokens on Bitcoin has driven a huge spike in transaction volume on the base layer network, and in turn driven up transaction prices. There are many different ways to put this congestion in context, but one very good metric is congestion in the Bitcoin mempool. The mempool is where transactions wait to be validated, and are ordered according to the fee bid attached to them. A fuller mempool means more competition to get your transaction into the next block.
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Reviewing the data is eye-opening in numerous ways. (I used this straightforward but stellar mempool visualization tool by Jochen Hoenicke, a researcher at smart contract security firm Certora.)
First, by sheer transaction volume, Bitcoins mempool has seemingly never been this full not by a longshot. The last major peak in April of 2021 saw 200,000 transactions waiting in line, but yesterday that number peaked at 450,000. (Hoenickes node only tracks back to 2017, but prior to that bull market, Bitcoin congestion and fees were negligible.)
Just as notable, these transactions are often tiny. You can also see, courtesy of bitinfocharts, that the average bitcoin transaction size has plummeted in recent days.
Average Transaction Fee on Bitcoin (Glassnode)
That exploding volume of small transactions seems to confirm that the demand spike has been driven by speculators (and/or future rug-pullers) frantically issuing and minting tokens using the experimental BRC-20 standard. Theres hype around the tokens right now, and degens seemingly want their $pepes and other casino tokens right now, not in 12 or 14 blocks. Coinmarketcap claims that a staggering 8,500 tokens have been issued on Bitcoin in the mere weeks since the BRC-20 standard was first floated.
Given that these are largely memecoins that amount to little more than gambling, the bidding war seems likely to be short-lived. And in fact, fees by May 10 had already declined a bit from their May 8 peak.
But heres the thing: if even a few million people wanted to actually use Bitcoin to send money peer-to-peer on a regular basis, wed be in exactly the same position. And it would be permanent, rather than transitory. The calls for Bitcoin censorship from maximalists are arguably incoherent for a number of philosophical reasons, but this practical incoherence is most striking. Bitcoiners upset at a temporary fee spike driven by degens may be better off focusing their energy on solutions to the imminent problem of sustained higher fees driven by everyday users.
See also: The Rise and Fall of Bitcoin Maximalism | Opinion
Most fundamentally, as Castle Island Ventures co-founder Nic Carter pointed out in these pages yesterday, high prices are the cure for high prices. We are seeing this in real time, particularly with Binance integrating the layer 2 Lightning network into its bitcoin withdrawal flow. Lightning is purpose-built for removing the load of smaller transactions from the base chain, but it does require a fairly arcane setup for peer-to-peer use. At the same time, Lightning service firms, such as David Marcus Lightspark, have a suddenly target-rich environment for making Lightning easier for average Joes.
In this respect, the BRC-20 fee spike seems likely to be a blessing in disguise: A warning shot that should trigger a frenzy of preparation for a sustained barrage.
There is a final, hypothetical irony here. The actual viability of both ordinals and fungible tokens on Bitcoin is still extremely unclear a significant bug in inscriptions was identified just last week, for instance. But if you squint, its not impossible to envision some form of ordinal technology enabling entirely new approaches to scaling Bitcoin, perhaps including layer 2 technology closer to what Ethereum can accomplish.
That may prove even more distasteful to the maximalist crowd than sharing their mempool with JPEGs and degens. But if youre actually committed to scaling Bitcoin, it may be time to think bigger.
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If Bitcoin Cant Handle a Few JPEGs, How Can It Handle the World? - Yahoo Finance
Bitcoin briefly falls below $26,000, posts worst week since November – CNBC
Bitcoin is facing a number of headwinds including low liquidity which is contributing to volatility. U.S. regulators are also heavily scrutinizing the crypto industry.
Nurphoto | Getty Images
Bitcoin traded at its lowest level since mid-March on Friday as volatility, driven by low liquidity, continued to hit cryptocurrency markets.
Bitcoin ended the day lower by 2.58% at 26,181.46 after briefly hitting a low of 25,833.34 the lowest level since March 17, according to Coin Metrics. The biggest crypto asset by market cap posted a weekly loss of 11.25%, making it its worst week since Nov. 11.
There are a number of issues facing crypto markets right now including low liquidity, a crackdown on the industry from regulators in the U.S. and macroeconomic worries.
Bitcoin is up around 59% this year but prices have remained volatile, with low liquidity exacerbating moves higher and lower.
ClaraMedalie, director of research atKaiko, said there has been a "notable drop in market depth" for bitcoin.
Market depth refers to a market's ability to absorb relatively large buy and sell orders. When market depth is low, then relatively small orders can cause the price of an asset to move up or down in a substantial way.
And the liquidity situation could be set to get worse after Bloomberg reportedthat Jane Street and Jump Crypto, two of the biggest crypto market makers, will take a step back from crypto trading in the U.S. as the country's regulators continue their crackdown on the nascent industry.
"While it is yet unclear the catalyst for today's sharp drop, the volatility is to be expected given the current state of liquidity, especially after larger market maker Jane Street and Jump Crypto revealed they were winding down their crypto exposure," Medalie said.
Liquidity has been a big issue for crypto markets since the closureof Silvergate and Signature Bank two key platforms that people used to buy into the crypto market.
Scrutiny from U.S. regulators on the digital currency industry has ramped up since the collapse of crypto exchange FTX last year.
The U.S. Securities and Exchange Commission warned American crypto exchange Coinbase in March over potential securities law violations. Coinbase CEO Brian Armstrong said the company is preparing for a years-long court battlewith the SEC.
Meanwhile, the Commodity Futures and Trading Commission alleged in March that crypto exchange Binance violated trading rules.
The crypto industry is in a battle with U.S. regulators, accusing the SEC and the U.S. government of not laying out clear rules.
Meanwhile, the bitcoin network itself has faced congestion in recent days with Binance last week forced to temporarily halt bitcoin withdrawals. Bitcoin transaction fees spiked this week and while they are coming down, they still remain at elevated levels. The original bitcoin network was not designed to handle high-volume transactions.
"Bitcoin's attempts to break through $30,000 have come undone amidst a triple whammy of congestion issues on the blockchain, liquidity constraints caused by the scaling back of top market-makers Jane Street and Jump Crypto, and ever-circling regulators," Antoni Trenchev, co-founder at Nexo, told CNBC via email on Friday.
CNBC's Tanaya Macheel and Gina Francolla contributed to this report.
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Bitcoin briefly falls below $26,000, posts worst week since November - CNBC
Bitcoin Keeps Falling, Hitting Two-Month Lows Amid Little Reason for Optimism – Barron’s
Bitcoin and other cryptocurrencies continued to decline Friday, sliding further from key levels as analysts eyed a gloomy technical backdrop for digital assets with few immediate catalysts for a rebound.
The price of Bitcoin has fallen 4% over the past 24 hours to $26,400, its lowest level in almost two months. The largest digital asset continues to languish well below the technically and psychologically important zone around $30,000, which prices topped in April for the first time since June 2022, when the crypto crash accelerated into a brutal bear market. Bitcoin has failed to consolidate these gains and has accelerated lower in recent days despite catalysts that could be read as positive.
Bitcoin is trading at its lowest level since March 17, losing over 15% from its peak last month, said Alex Kuptsikevich, an analyst at broker FxPro. Bitcoins return to $25,000 looks like a real prospect in the coming days.
While macroeconomic data have provided catalysts in recent days, Bitcoin has failed to capitalize on trends indicating an improving backdrop for the most risk-sensitive assets, like cryptos and high-growth stocks like those in the tech sector.
In the stock market, the tech-heavy Nasdaq Composite which tends to trade more like Bitcoin than do the Dow Jones Industrial Average and S&P 500 has marched higher amid signs of cooling inflation. Disinflation should allow the Federal Reservewhose campaign of dramatic interest-rate hikes over the past year have wreaked havoc on Bitcoin and tech stocks aliketo pause, supporting high-growth assets.
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But it has done little to buoy Bitcoin, adding to worrying technical signs of cryptos weakening. Sentiment over digital assets also has taken a hit, with the Crypto Fear and Greed Index falling to 49 on Friday, indicating neutral sentiment but sitting at the lowest levels since early March, when a selloff pushed Bitcoin close to $20,000.
The local technical pattern offers little reason for optimism, added Kuptsikevich, citing Bitcoins plunge through its 50-day moving average earlier this week and stagnation below another support line at $27,500. In other words, we see more than just a correction of this latest growth impulse, said the analyst.
Beyond Bitcoin, Ether the second-largest cryptofell 3% to below $1,775. Smaller cryptos or altcoins were more mixed, with Cardano up 2% and Polygon down 1%. Memecoins were also mixed, with Dogecoin hovering around flat and Shiba Inu shedding 2%.
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Write to Jack Denton at jack.denton@barrons.com
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Bitcoin Keeps Falling, Hitting Two-Month Lows Amid Little Reason for Optimism - Barron's
Bitcoin has climbed 65% this year despite crypto woes. Experts explain why. – ABC News
The cryptocurrency industry, in recent months, has suffered some blows: high-profile bankruptcies, the arrest of wunderkind Sam Bankman-Fried and a regulator lawsuit against top crypto exchange Binance.
Despite it all, the price of the largest cryptocurrency, bitcoin, has surged.
Bitcoin has climbed 65% this year, far surpassing the S&P 500, which has jumped 7%. Even the Nasdaq, a tech-heavy index, has delivered just a quarter of bitcoin's gains.
In fact, bitcoin has benefited from crises in the cryptocurrency arena, analysts said, since the unrest has pushed investors away from lesser-known coins and toward the sector's household name.
Plus, the price has gained a boost from wider economic forces like trouble in the financial system and slowing interest rate hikes, they said.
But the coming months pose uncertainty, experts added, as a looming recession could test the performance of an asset less than 15 years old.
The blockbuster performance of bitcoin in 2023 comes after the digital currency's price plummeted last year. In all, the price of bitcoin fell 65% last year, exceeding the losses suffered by the S&P 500, which dropped about 20%.
The price struggles for bitcoin, which extended throughout much of the cryptocurrency sector, coincided with an aggressive series of interest rate hikes that put downward pressure on many assets, including the major stock indexes.
"There had been a big bubble," James Butterfill, head of research at digital asset management firm CoinShares, told ABC News. "The bubble was pricked by the Fed."
The distress in cryptocurrency helped trigger a slew of failures. Last May, a major coin, Terra, collapsed along with its sister coin Luna. Meanwhile, several crypto lenders such as Block Fi, Celsius and Genesis filed for bankruptcy last year.
In dramatic fashion, crypto exchange FTX filed for bankruptcy in November after a collapse in a matter of days that was followed by the arrest of Bankman-Fried, the company's founder and former CEO. Bankman-Fried has pleaded not guilty to all 13 counts he faces, including fraud and conspiracy.
The unrest last year sent crypto investors toward well-known digital currencies, Callie Cox, an analyst at the investment company eToro who tracks cryptocurrencies, told ABC News.
"Bitcoin has been the beneficiary of a flight to quality within the crypto industry," Cox said. "This is the crypto name that my mom and your family probably know."
Butterfill, of CoinShares, echoed the point: "People are becoming a lot more discerning. There are 50,000 crypto coins out there and a lot of them are rubbish."
Ethereum, the world's second-largest cryptocurrency, has surged 52% this year, benefiting as well from the rush toward prominent coins, Butterfill said.
The rise in the price of bitcoin has coincided with favorable developments across the wider economy, since the Federal Reserve has slowed its interest rate hikes and unrest in the traditional banking sector has pushed some investors to seek a digital alternative, experts said.
Since March, three of the nation's 30-largest banks have collapsed. Shares of regional lender PacWest Bancorp plummeted on Thursday after the bank said it lost 9% of deposits last week, suggesting that financial instability persists.
"When the banking system faced threats, a lot of investors saw reason to doubt the financial system," said Cox, of eToro. "They went looking for alternatives."
There is little data available that depositors pulled money out of banks and placed it in bitcoin, Butterfill noted, adding that he had heard anecdotes of bank customers transferring funds to crypto.
If the Fed halts its rate hikes, as many investors expect, bitcoin could continue its rise over the latter part of the year, experts said. However, they cautioned that a potential recession could bring volatility.
"There might be nervousness about bitcoin as we move closer to a recession," Cox said, pointing out that interest rates would remain elevated even after a pause. "There are a lot of crosswinds for crypto right now."
Butterfill acknowledged uncertainty about the outlook of day-to-day performance for bitcoin, but remained optimistic about the remainder of 2023, even if it involves a recession.
"Economic data continues to deteriorate," Butterfill said. "In that environment, bitcoin would be volatile and perform quite well."
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Bitcoin has climbed 65% this year despite crypto woes. Experts explain why. - ABC News
How will lower interest rates benefit Bitcoin? – Cointelegraph
Macro Markets, hosted by crypto analyst Marcel Pechman, airs every Friday on the Cointelegraph Markets & Research YouTube channel and explains complex concepts in laypersons terms, focusing on the cause and effect of traditional financial events on day-to-day crypto activity.
Todays show starts by discussing the economic crisis in Argentina, a Latin American country that is experiencing hyperinflation.After years of populist measures, its local currency, the peso, saw its value go down by 70% in two years. The governments overspending caused another issue: a lack of United States dollars for the government and companies to pay for imports and remittances. But what does that mean for the U.S. dollar, Bitcoin (BTC) and gold?
According to Pechman, gold poses serious problems, as there is no easy way to ensure whether or not the precious metal is fake, and it doesnt actually work for remittances. Therefore, dollars and euros are the preferred means of savings and exchange for those facing a weak domestic currency.
Pechman proceeds to explain how fintechs costs and government control limit their potential in Argentina, and why stablecoins are the preferred vehicle for remittances. On the other hand, the analyst shows why cryptocurrencies fail to attract people in those fragile economies, including El Salvador.
The next segment of Macro Markets focuses on the Federal Deposit Insurance Corporation (FDIC). Reuters reported that the 113 biggest banks in the U.S. will have to cover the recent FDIC loss of $16 billion caused by saving failed financial institutions. Consequently, theres a cascading effect as the remaining institutions are obligated to cover the losses. Pechman mentions how the Federal Reserve will eventually reduce interest rates and benefit risk-on assets, including Bitcoin.
If you are looking for exclusive and valuable content provided by leading crypto analysts and experts, make sure to subscribe to the Cointelegraph Markets & Research YouTube channel. Join us at Macro Markets every Friday.
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How will lower interest rates benefit Bitcoin? - Cointelegraph
Fidelity’s Timmer: Bitcoin Rally Got Overheated – U.Today
Alex Dovbnya
Fidelity Director of Global Macro Jurrien Timmer has drawn strong parallel between market dynamics of Bitcoin and gold, while sounding alarm about Bitcoin's potential overvaluation at the $30K mark
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Jurrien Timmer, Fidelity's director of global macro, recently commented on the state of Bitcoin, comparing its current market dynamics to those of gold.
Timmer suggests that Bitcoin is now marching to the same rhythm as gold but warns that the leading cryptocurrency may have gotten a bit ahead of itself, hinting at potential overvaluation at the $30,000mark.
In his analysis, Timmer has highlighted an 88% inverse correlation between Bitcoin and the two-year real TIPS yield, and a 63% inverse correlation to the PCE-derived real rate. This correlation analysis, based on data since 2018, puts Bitcoin in a similar position to gold in terms of its reaction to real rate drivers.
In layman's terms, what Timmer is suggesting here is that Bitcoin's price tends to move in the opposite direction of these two economic indicators. If the returns on certain government bonds go up, or if inflation rises, we can expect the price of Bitcoin to generally go down, and vice versa. It is important to note, though, that these are just tendencies; they do not happen every time, and other factors can also influence Bitcoin's price.
The executive's insights shine a spotlight on Bitcoin's strong correlation with gold, but his caution about Bitcoin's potential overvaluation emphasizes the need for investor prudence.
The Bitcoin price has dropped to its lowest since March 17, with an over 12% decrease since May 6, decoupling from traditional risk assets like the Nasdaq.
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Fidelity's Timmer: Bitcoin Rally Got Overheated - U.Today
Bitcoin Liquidity on Binance Has More Than Halved Since February: Kaiko – Yahoo Finance
Binance trading volumes and liquidity have been steadily declining in the first quarter of 2023 amid the spate of U.S. banking failures and after ending its zero-fee promotion.
The result?
Its led to even more chop for the price of Bitcoin, Kaiko analyst Dessislava Aubert told Decrypt.
Aubert said that "Overall, Bitcoin liquidity on Binance has more than halved relative to the start of February from around $45 million to $16 million in early May."
The primary reason for the decline in liquidity was the removal of Binances 10-month zero-fee promotion for 13 different BTC pairs, which also caused market makers to leave the platform.
Specifically, monthly trading volumes for the exchanges most-traded pair, BTC-USDT, volume fell from $16 billion in March to $2 billion in April, said the Kaiko analyst.
Aubert added that the drying liquidity has been more pronounced after the spate of banking failures earlier this year. The collapse of two key on-ramps for the industry in Silvergate and Silicon Valley Bank also hit specific firms, including Ripple, Circle, Yuga Labs, and many others.
Bitcoin market liquidity and trading volume on Binance. Source: Kaiko.
The 1% market depth, a measure of liquidity calculated using the bids and asks within 1% of the mid-price, on Binance declined significantly after the banking failures.
The result of reduced liquidity and volumes on Binance has been increased volatility.
Kaikos intraday volatility metric for the 10-minute interval surged considerably around the time liquidity began dropping on Binance.
Bitcoin intraday volatility at 10-minute intervals. Source: Kaiko.
Low-liquidity conditions mean thin order books on exchanges which provide room for wild price swings from large orders.
We have seen this with BTC's recent sudden price move which did not have a clear catalyst, said Aubert. Volatility is unlikely to go away especially after some larger market makers (Jane Street and Jump Crypto) revealed they were reducing down their crypto exposure.
Bitcoin Liquidity Hits 10-Month Low Amid US Banking Crisis
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Notably, Bitcoins price dropped this week despite favorable conditions such as a positive CPI report and market expectations largely inclined toward an interest rate cut in the future by the U.S. Federal Reserve.
A low-interest rate environment enables cheaper debt in the economy which fuels a rise in speculative assets like Bitcoin.
However, the asset failed to stage an uptrend likely due to poor liquidity.
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Bitcoin Liquidity on Binance Has More Than Halved Since February: Kaiko - Yahoo Finance
Bittrex approved to borrow $7 mln bankruptcy loan in bitcoin – Reuters
May 10 (Reuters) - Bankrupt cryptocurrency exchange Bittrex Inc received court permission Wednesday to borrow $7 million in bitcoin to fund the start of its Chapter 11 case.
Seattle-based Bittrex filed for bankruptcy Monday, saying it intended to return customer funds and wind down its U.S. operations. The company's international affiliates will continue to operate crypto exchanges for customers outside of the U.S., but Bittrex said that the U.S. regulatory environment had become untenable after the SEC sued the company for allegedly running an unregistered securities exchange.
Before filing for bankruptcy, Bittrex stopped accepting new deposits from U.S. customers and told its existing users to withdraw their crypto from the platform.
Bittrex's U.S. operations made up a minority of its overall users. Affiliated exchanges based in Liechtenstein and Bermuda accounted for about 77% of the company's 5.4 million users as of March 27, according to court filings.
Bittrex believes that it has enough cryptocurrency to fully repay all remaining customers, and the bankruptcy loan will ensure a smooth wind-down that protects customer assets, attorney Susheel Kirpalani told U.S. Bankruptcy Judge Brendan Shannon at a Wednesday court hearing in Wilmington, Delaware.
Shannon approved the loan on an interim basis, allowing Bittrex to borrow 250 bitcoin from its parent company Aquila Holdings, which is not filing for bankruptcy. Bittrex will seek permission to borrow an additional 450 bitcoin at a hearing in June, and the total value of its proposed loan is $19.7 million, based on bitcoin prices when it filed for bankruptcy.
Shannon said he was persuaded to accept a "novel currency" for the loan because it offered favorable terms compared to other bankruptcy loans, including a relatively low 4% interest rate and built-in protections related to bitcoin's price volatility. Bittrex intends to repay the loan in bitcoin, and it will not be forced to pay more than 110% of bitcoin's current value if it is later forced to acquire more bitcoin to make loan repayments, according to court documents.
Shannon also approved temporary privacy protections allowing Bittrex to remove customer names from court documents. Bittrex attorney Patricia Tomasco pointed out that one large accountholder has more than $14 million in crypto still on Bittrex's platform, saying that revealing that customer's name would subject them to a barrage of phishing emails.
"That's a pretty hefty prize for low-tech skullduggery," Tomasco said.
Shannon said he will revisit the privacy issue at a later hearing.
The case is Bittrex Inc, U.S. Bankruptcy Court for the District of Delaware, No. 23-10598.
For Bittrex: Susheel Kirpalani and Patricia Tomasco of Quinn Emanuel Urquhart & Sullivan
Read more:
Crypto exchange Bittrex files for bankruptcy after SEC complaint
US SEC charges Bittrex with operating unregistered securities exchange
Reporting by Dietrich Knauth
Our Standards: The Thomson Reuters Trust Principles.
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Bittrex approved to borrow $7 mln bankruptcy loan in bitcoin - Reuters