USD Dominance in Crypto Market on The Fall, Bearish Sentiment Continues
The US regulators have been cracking down on the crypto space for a while. As a result, it becoming harder for companies to access USD to buy digital assets.
The total number of payment providers is shrinking in the United States and also stablecoins, which have been the foundation of crypto, have seen their dominance waning since the collapse of the crypto exchange FTX.
Considering the trading volume of the world’s largest cryptocurrency, the Dollar-denominated BTC has continued to drop. On the other hand, Euro and Tether-denominated Bitcoin pairs have been gaining traction since November 2022. In its report on Monday, March 6, blockchain analytics firm Kaiko reported:
The euro certainly presents an opportunity, but when looking at the market share of volume for USD-denominated pairs, we see a broader story emerge: that of the declining use of the dollar in crypto. Since the FTX collapse, USD market share has fallen consistently relative to USDT, USDC, and euro trading pairs.
Clara Medalie, director of research at Kaiko, said that the decline in USD after FTX’s collapse could be majorly linked to a drop in institutional trading activities. She added that institutional trading desks usually prefer settling their trades in dollars instead of stablecoins.
Stablecoins On the Rise in Crypto Market
In the past, traditional banking platforms have played a key role as a reliable on-and-off ramp between crypto platforms and hard currencies. But amid the FTX collapse, US banks have been cutting down their association with crypto firms.
Amid the recent downfall of crypto-focused bank Silvergate Capital, stablecoins are once again gaining traction among traders. In its report, Kaiko stated that the number of fiat trading pairs listed by exchanges has dropped since the rise of stablecoins. Last year in 2022, the total number of dollar-denominated trading pairs across all crypto exchanges dropped to 326 from 400 a year ago. On the other hand, the euro-denominated trading pairs jumped from 96 to 125.
Crypto Market Bearish Sentiment
After last week’s correction, the broader crypto market has entered consolidation. But on-chain data from CryptoQuant shows that the funding rates have been on a decline and the overall sentiment has remained largely bearish. CryptoQuant contributor caueconomy writes:
The funding rate of perpetual futures normally signals the current market bias, at which point traders build short positions. If we have more leverage building and bearish bets in this setup we could have a price recovery driven by cascading shorts liquidations.
The market is mostly bearish and is betting on further declines, according to funding rates.
“If we have more leverage building and bearish bets in this setup we could have a price recovery driven by cascading shorts liquidations.”
by @caueconomy
— CryptoQuant.com (@cryptoquant_com) March 7, 2023
The post USD Dominance in Crypto Market on The Fall, Bearish Sentiment Continues appeared first on CoinGape.
Filed under: News - @ March 7, 2023 5:22 am