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Why is the crypto market down today?
The cryptocurrency market is declining today as macroeconomic factors deter investors and reduce liquidity.
The price dynamics of the cryptocurrency market continue to tilt downwards as investors and companies digest the consequences of the accusations against Binance and Coinbase.
The lawsuits have also impacted the decentralized financial markets (DeFi), reducing overall liquidity, and most analysts believe there will be more pain in the near future.
Bitcoin price lags behind equities
Cryptocurrency exchange rates remain highly correlated with the Dow and S & P 500 indices, and most major banks still expect a severe recession in the US sometime in 2023, which did not stop major stock indices from hitting annual highs after the US debt ceiling deal was finalized.
The US Securities and Exchange Commission’s (SEC) crackdown further widens the gap between equities and bitcoin. Since the complaint was filed, outflows from digital asset investment products have totaled more than $88 million.
TVL and volume remain low
The attack on central exchanges has also increased inflows and outflows from Bitcoin exchanges. Exchange inflows indicate increased selling pressure, while outflows are typical of average self-deposits.
Despite net inflows into blockchain self-depositories, DeFi did not see an increase. The Total Value Locked (TVL) index is a standard way of studying the state and climate of the crypto-currency markets. According to DeFiLlama, across all protocols, the TVL index has fallen by 0.5% in the last 24 hours and lost $120 billion as at 5 April 2022.
Bank of China issues $28 million worth of digitally structured debt on the Ethereumblockchain
The securitised tokens are subject to the laws of Hong Kong and Switzerland.
On 12 June, BOCI, a subsidiary of Bank of China Investment Bank, announced the issuance of CNY200 million (USD28 million) worth of digitally structured bonds minted on the Ethereumblockchain.
The initiative makes BOCI the first Chinese financial institution to issue a securitized security in Hong Kong. Investment bank UBS helped develop the product to position it among clients in the Asia-Pacific region. Ying Wang, deputy CEO of BOCI, commented:
In tandem with its growth, UBS has expanded its labelling into structured products, fixed income securities and buy-back financing. In December 2022, the company issued a $50 million fixed income bond under English and Swiss law, which was digitized on an authorized blockchain.
Cointelegraph previously reported that Hong Kong opened access to cryptocurrency exchanges to retail customers on 1 June.
About two weeks later, Joseph Chan Ho-lim, the Hong Kong government’s finance minister, said the SAR was “actively” involved in the blockchain industry and planned to establish a framework for regulating fixed currency transactions within a year.
On 16 February, Hong Kong issued a HK$800 million green bond. Hong Kong dollars with Goldman Sachs’ GS DAP tokenization protocol and an annual yield of 4.05%. Hong Kong launched two tradable cryptocurrency futures funds in December 2022 and raised over $70 million before launch.
