On-Chain Data Suggests Short-Term Setback; Stablecoin Transparency Act Introduced

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Chart of the Day

On Thursday, the broader crypto market took a plunge after European Union (EU) lawmakers backed a proposal that will empower the EU with more control over the cryptocurrency space, specifically within the domain of crypto transfers. On Thursday morning (Asian trading hours), BTC penetrated several key support levels within the $44k to 46k zone after shedding a sizable 4.2% of its market value from 24 hours ago. As of the time of writing, the largest crypto by market cap is stabilizing above the $45k handle, with its upside potential temporarily capped near the $46.3k resistance level. If the $45k support doesn't hold, BTC may dip further to test the support levels within the $43k to $44k zone.

In a similar vein, ETH is currently struggling to stay above the $3,300 level after experiencing a 4% decline within the last few hours. Most major altcoins have also flipped red within the past 24 hours. This is with the exception of SOL, as the popular L1 token has managed to score a 2% increment within a similar timeframe on the back of its robust NFT trading activities. On the on-chain front, datapoints do suggest that the plunge is likely to be a minor setback, as many fundamental on-chain metrics are consolidating into levels that were last seen during the 2017 bull cycle. Since December of 2017, the long-term BTC holders' BTC supply has seen a net gain of 19.2%, whilst the percentage of illiquid supply has also been steadily rising back to 2017's peak.

Talk of the Town

On Thursday, U.S. legislators introduced the Stablecoin Transparency Act, a bill designed to protect consumers by mandating stablecoins to be fully backed by dollars or short-term government securities. Once passed, the bill will also legally compel stablecoin issuers like Tether and Circle to regularly disclose audited reports detailing the composition of their reserves. On a separate but related note, Circle has chosen the Bank of New York Mellon as its primary custodian for USDC in response to the increased regulatory pressures.

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