Bitcoin meets resistance and loses $21,000 in the face of impending bankruptcy of another broker

As many traders expected, Thursday (19th) is bearish for cryptocurrencies after exhausting a strong rally that started early last week. Bitcoin (BTC), which was up 25% from just over $17,000 to $21,500, was down 2% as of 7 am today to stand at $20,804. Ethereum is down 3.2% to $1,527, closely followed by BNB and Cardano (ADA), Dogecoin (DOGE), and Polygon (MATIC), down 2.9% to 5.5%.

Rallies in DOGE and other meme coins — such as Shiba Inu (SHIB), which skyrocketed yesterday and is down 7.2% today — are an adverse indicator of market health, according to blockchain analytics firm Santiment. . When these prices skyrocket, therefore, it means that the market is about to sell out.

“Every time that [o] the price of DOGE starts to skyrocket, moments later there is a market-wide crash,” the company wrote.

Prices, however, saw sharp volatility yesterday afternoon shortly after the US Justice Department announced a press conference on the cryptocurrency sector, raising suspicions about yet another serious case in the sector. But traders were relieved when authorities revealed they are holding back on shutting down and arresting the founder of an unknown cryptocurrency exchange called Bizlato. The company is accused of brokering $700 million in money laundering.

“It was a scare, the market feared he would be a more relevant player. He turned out to be a player that I honestly didn’t know, I had never heard of”, commented João Marco Cunha, portfolio manager of Hashdex, during yesterday’s participation in the Onde Investir 2023 event, promoted by Money info.

The perception that the problem was less than expected was enough to stop the decline above US$20,000, a level that held even after the news that Genesis was indeed preparing to file for bankruptcy in the US, perhaps this week. The exchange is one of the subsidiaries of the Digital Currency Group (DCG), a cryptocurrency conglomerate that also owns CoinDesk and digital asset manager Grayscale. DCG announced on Wednesday it was suspending its dividend payments to shareholders.

For some analysts, the erratic behavior of the market in the face of the prolonged crisis of companies in the sector can actually be explained by an alleged correlation between digital assets and the devaluation of the dollar.

“In our opinion, cryptocurrencies (and Bitcoin in particular) have been somewhat misunderstood. [O BTC] it is not a hedge against inflation, but rather a hedge against loss of purchasing power, protecting holders from fiscal/currency profligacy,” assesses Jonah Van Bourg, global head of commerce at Cumberland.

“Any risk of US debt default is actually a form of US dollar degradation, and the increased demand we are seeing (expressed in higher crypto prices) is supportive of this use case,” he says.

On the other hand, Giles Coghlan, chief market analyst at HYCM, told CoinDesk that the correlation between cryptocurrencies and tech stocks continues, and this is the factor to watch for the future. The Nasdaq closed down 1.24% yesterday and continues to trade as low as 0.16% in the futures market on Thursday.

“Tech stocks rallied on the assumption that US inflation is easing and that market expectations of two short-term interest rate cuts this year are correct. We could see a similar recovery in the cryptocurrency markets,” she said, dismissing any connection between the debt ceiling debate and the cryptocurrency rally.

“Ultimately, the cryptocurrency rally should continue as long as tech stocks recover. However, as all eyes are on the earnings season, that could change quickly.”

Even so, several altcoins are on the rise today, with emphasis on Enjin Coin (ENJ), which is up 16%, Kava (KAVA), up 11%, and Frax Share (FXS), a DeFi project which has attracted investors looking for remuneration for its cryptocurrencies, after an appreciation of almost 70% in the last 7 days – today the jump is more than 7%.

Check out the performance of the main cryptocurrencies at 7:00:

Cryptocurrencies with the biggest gains in the last 24 hours:

Cryptocurrencies with the biggest losses in the last 24 hours:

Find out how cryptocurrency ETFs closed in the last trading session:

Binance was one of the best companies to trade with the investigated exchange

Binance has been named by US Treasury-linked FinCEN as the primary recipient and sender of transactions related to the Bitzlato exchange, which was shut down and had the founder arrested.

FinCEN has suggested that Binance is a company linked to “darknet markets or scams”.

Bitzlato’s top three receiving counterparties, by total amount of BTC received between May 2018 and September 2022, were: (1) Binance, a VASP; (2) the darknet market connected to Russia Hydra; and (3) the alleged Russia-based Ponzi scheme ‘TheFiniko’,” says an official agency document.

During the same period, the top three companies that sent cryptocurrencies to Bizlato were Hydra, Local Bitcoins and TheFiniko.

“Binance is pleased to have provided substantial assistance to international law enforcement partners in support of this investigation. This exemplifies Binance’s commitment to working collaboratively with law enforcement partners around the world,” a Binance spokesperson told CoinDesk.

OKX Releases Proof of Reserves with $7.5B

The OKX exchange has $7.5 billion in reserves, excluding its native token, according to a reserve test released by the exchange on Thursday.

This is OKX’s third published reserve test, but the first to show the exact asset breakdown.

The report shows that the exchange has more assets than liabilities, with a reserve ratio of 105% for Bitcoin, 105% for Ethereum and 101% for stablecoins USDT.

OKX tops the “booking health” chart, according to a metric created by analytics house CryptoQuant: The fewer bookings the firm’s tokens have, the healthier it is considered.

After OKX, with reserves considered “100% clean”, comes Binance, 87%, followed by Bitfinex, with 70%, and Huobi, with 60%.

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