AI Summary
Show More
Quickly grasp the article's content and gauge market sentiment in just 30 seconds!
US stocks captured the best weekly performance since June last week, extending a rally sparked by a slowdown in inflation data. The dollar remained weak for the fourth consecutive week, posting the longest streak since March 2020. However, in the crypto market, massive selloffs continued into the weekend, after Bankman-Fried’s crypto empire filed for bankruptcy last Friday, alongside more than 130 entities with ties to it.
The situation was exacerbated over the weekend, as unauthorized withdrawals drained $600 million from FTX’s crypt wallets. An examination of the FTX balance sheet revealed that users are likely getting less than 5 cents on the dollar when the dust settles. The broader market spiraled as more damage surfaced, with BTC plunging headlong to under the $16k level and ETH testing the $1,100 support. In the derivatives market, funding rates across centralized exchanges for both BTC and ETH dived into the negative territory as extreme fear plagues the market. In the options market, volatility will likely remain elevated, presenting further jump risks in this low liquidity market.
However, there is still a silver lining in the calamitous fallout. The overhang to larger entities, those with 1k to 10k BTC holdings, at the beginning of 2021 is more or less normalized as coins begin to be distributed to smaller entities. Entities with less than 10 BTC holdings reached an all-time high, representing more than 15.9% of the circulating supply.
It’s generally not a good sign when some of the top weekly performers are stablecoins, but this token caught our attention with its market-defying surge. DYDX is up 21.4% week-on-week, fueled by the pivot towards decentralized exchanges (DEX) amid the FTX collapse. DYDX’s unique DEX experience and technical structure seem to gain traction among the community, as trading volume on the platform surged to more than $2 billion over the weekend.
On the 1-hour chart, DYDX’s price action saw double-digit percentage gains on Sunday. However, the price movement has become choppy in the $2.27 to $2.55 range and has since moved down to test the immediate support near the 50-hour EMA. On the 1-day chart, the MACD line has just crossed the signal line from below, suggesting the current bullish sentiment may be here to stay. Meanwhile, RSI remains in the neutral zone, indicating that the sentiments are still in check.
The implosion of Bankman-Fried’s crypto empire is likely to have a lasting impact on the industry in terms of increasing regulatory pressure. Several US lawmakers regard the pandemonium as evidence to call for stricter regulatory oversight of the crypto industry. Early in the tumult, Congressman Patrick McHenry, the top Republican on the House Financial Service Committee, released a statement highlighting the necessity of Congressional action to ensure adequate customer protection. Congressman Brad Sherman is the latest politician to join the chorus of advocacy for increased regulation. He also warns that billions of political donations by “billionaire crypto bros” may have deterred meaningful legislation.