ALBAWABA — Bitcoin hovered above $24,000 amid a bout of stability in crypto markets following a selloff sparked by worries about a clampdown on cryptocurrencies lead by the United States.
The largest token rose 2.30 percent as of 6:19 p.m. UTC on Thursday to $24, 889.20 while smaller coins such as Ethereum, Cardano, Dogecoin and Binance Coin dipped slightly as Solana and Polygon MATIC rose marginally.
The New York State Department of Financial Services directed Paxos Trust Co to stop issuing new tokens of crypto’s third largest stablecoin, a Binance-branded coin known as BUSD that has roughly $16 billion in circulation resulted in curbing a bounce in crypto from 2022’s rout and heightened the uncertainty for digital assets.
Changpeng “CZ” Zhao, co-founder and CEO of Binance, during a Twitter Spaces said Tuesday the crypto industry may move away from dollar-linked stablecoins and sought to reassure investors about the strength of his exchange.
“BUSD is not issued by Binance,” Zhao said. “We have an agreement to let them (Paxos) use our brand, but that's not something that we created.”
“With BUSD gone, BUSD slowly winding down over time, we will continue to work with more stablecoin issuers or creators,” Zhao added, citing existing support for other stablecoins.
A gauge of the top 100 tokens remains far off a peak hit in 2021 but even under tightened global monetary policies has rebounded 28 percent this year.
There are “increasing signs that the market bottomed last November and has turned bullish,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC, adding that crypto markets are gaining in momentum and shrugging off any bad news, typically signs that the market believes the worst is over.
“The market seems to be taking the news quite well and that sentiment remains cautiously optimistic given we might have seen most of the selling in the market occur over the last year,” Ayyar added.
As investors wait to see what happens next on the regulatory front, Ayyar noted that markets might take some time to consolidate and await any further regulatory crackdown actions that play out, hence the markets could see a couple of weeks of sideways action.
“We’re seeing a lot of scrutiny across various sectors in crypto in the U.S., with the two most recent areas being staking and stablecoins. This is an obvious repercussion of the fallout from FTX, Luna, and the general contagion in crypto over the last year,” Ayyar added.
Bitcoin spent most of 2022 trading in direct correlation with stocks, especially shares in technology firms that took a hit when the U.S. Federal Reserve began raising interest rates and reducing liquidity to try and ease inflationary pressures.
The correlation broke off when the FTX Trading exchange collapsed and cryptocurrencies plunged.
As the S&P 500 added nearly 8 percent this year and the tech-heavy Nasdaq 100 advanced 15 percent, Bitcoin has risen over 34 percent this year, after tumbling 64 percent in 2022.
Crypto investment firm Satori Research's chief executive, Teong Hng told India Today that crypto markets tend to do well during U.S. trading hours, a sign that institutional investors may be behind the buying interests.
Shawn Cruz, head trading strategist at TD Ameritrade told Bloomberg: “It is interesting to me that you’re seeing crypto rally when you have the SEC (U.S. Securities and Exchange Commission) continuing to crack down on a lot of these businesses.”
“I’m not entirely certain I would expect that to remain,” added Cruz.