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Analysis on the recent USDT and Binance FUD
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Despite crypto prices trending sideways this week, fear, uncertainty and doubt (FUD) continued to spread throughout the space.
This week we assess if there’s merit behind the recent Binance and Tether FUD taking a look at key on-chain metrics.
Finally, we provide a challenging perspective of the current state of the market as emotions reach extreme levels and crypto doomsday scenarios become over-emphasized.
Network Fees — Sum of total fees spent to use a particular blockchain. This tracks the willingness to spend and demand to use Bitcoin or Ether.
- Bitcoin fees dropped sharply to their lowest in three months
- Ethereum fees reached a four-week high, with ETH and USDT transactions leading the way in terms of gas consumption
Exchanges Netflows — The net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges. Crypto going into exchanges may signal selling pressure, while withdrawals potentially point to accumulation under regular circumstances
- Bitcoin recorded modest inflows despite the broader trend towards outflows
- Over half a billion worth of ETH left CEXs as FUD continues
Crypto FUD Heightens
SBF was arrested and yet the media seems to continue to look for crypto people to go after. This week, CZ and USDT took the heat as rumors spread that they may be next domino to fall in the crypto crash. Based on this FUD, people began panicking on social media — a pattern which is clearly visible across blockchain data.
Via IntoTheBlock’s USDT network indicators
400k Holders Less — The number of addresses with USDT on Ethereum dropped from 4.01M to 3.57M this week
- On Tron, where most USDT in circulation is currently available, the number of holders dropped even further: from 17.5M to 15.5M within a few days
- This marks the lowest number of addresses holding USDT since October 2021
The reason behind this move remains unclear, though it could be linked to Wall Street’s increased short-selling activity against USDT which was reported by Bloomberg.
Via IntoTheBlock’s USDT Ownership Metrics
Retail Leaving or Reallocation? The number of addresses holding between $100 and $1k worth of USDT dropped precipitously
- On the other hand, the number of addresses holding between $10k all the way up to $1B recorded increases
- At the same time, the price of USDT remained highly pegged and its market cap actually grew slightly
- This could suggest either (a) retail opting out of Tether while larger addresses buy
- Or, (b) USDT is simply being rebalanced internally by entities who moved from having many addresses with small amounts of USDT to fewer, more concentrated addresses
USDT FUD continued to spread throughout the week, even though redemptions are still working as intended.
Similarly, ripple effects of scrutiny towards Binance are noticeable in BUSD’s activity.
Via Coingecko’s stablecoins section
Binance’s -$10B Week — the market cap of BUSD dropped by over $3B over the past seven days, while BNB lost $7B of value
- After issuing proof of reserves, Binance proved it’s customers crypto holdings were more than fully backed
- However, the lack of transparency regarding its liabilities gave rise to critics even though CZ stated they don’t owe any loans and are planning on auditing their liabilities as well
- This led “Binance FUD” to become trending topic on Twitter in the United States at the beginning of the week
Then on Thursday Binance-related fears spiked following CZ’s CNBC interview
- In it, CZ avoids answering whether they would be able to handle a loss of $2.1B, which they generated from FTT sales being “clawed back” due to FTX’s embezzlement, instead just stating that they are in a strong financial position
- A shortened clip of the interview taken out of context was shared on Twitter and was liked by Jack Dorsey amongst thousands of others with the message “Get your Bitcoin OFF Binance”, further adding fuel to the fire
The manic behavior surrounding Binance and USDT are worth further reflecting upon…
Via Twitter
Extrapolating Based on Recent Traumas — The high impact the collapses of UST, Three Arrows Capital and FTX had is leading to the negative association of similar projects. After FTX’s fraud people began heavily scrutinizing exchanges, pushing them towards greater transparency.
While it’s understandable to question these entities and to act cautiously, it does not mean that all other exchanges have been pulling an FTX embezzling clients funds — nor that all other stablecoins will go to zero.
Just how in 2021 everyone was looking for the next 100x gem, now everyone is obsessing over the next possible -100% crash… Both highlight the polar opposites of extreme emotions within crypto and caution against blindly following the herd.
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Crypto FUD Heightens was originally published in IntoTheBlock on Medium, where people are continuing the conversation by highlighting and responding to this story.
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