5 Things to Know in Crypto Today: BTC Recovers Slightly to Low-$21Ks After Friday’s Rout

Key Points

• Cryptocurrency markets are stabilizing on Saturday after Friday’s beating.
• Bitcoin was last trading near $21,250, up around 2.0% on Saturday after dropping 10% on Friday.
• Concerns about Fed hawkishness have been cited as weighing on cryptocurrency prices this week.

Cryptocurrencies Stabilize After Friday Rout

After the worst sell-off in over two months on Friday, cryptocurrency markets are licking their wounds on Saturday. Bitcoin tumbled 10% on Friday to at one point fall below $21,000 but has since rebounded about 2.0% on Saturday back into the $21,250 area. Ethereum, meanwhile, has stabilized in the low-$1,600s after dumping nearly 13% on Friday. The likes of XRP, BNB, ADA, SOL and DOGE are all between 1-4% higher in the past 24 hours, according to CoinMarketCap, after all experiencing significant losses on Friday.

Traders cited concerns about Fed tightening in wake of hawkish commentary from Fed officials this week that boosted the US dollar and US bond yields as weighing on sentiment in cryptocurrency markets. While officials differed in their opinion as to how fast and high interest rates should be lifted, they were unanimous in their agreement that the battle against inflation remains far from won and remains their utmost priority. That triggered some concerns that markets might be underestimating the Fed’s resolve to lift interest rates and hold them at elevated levels in 2023.

Fed Chair Jerome Powell’s speech at next week’s Jackson Hole symposium event will be massive for cryptocurrency markets.

Tether’s New Auditor Confirms Drop in Commercial Paper Holdings

BDO Italia, stablecoin issuer Tether’s new auditor confirmed that, as of 30 June, Tether held $66.4 billion in reserve assets. The new audit showed that Tether’s holdings of commercial paper is down 58% to $8.5 billion as of the end of last quarter. Tether says these holdings will be down to $200 million by the end of this month and zero by the end of the year.

Tether CTO Paolo Ardoino said in a company blog post that “the utility of Tether continues to be supported by the transparency of its reserves and has been a leading source of stability allowing us to build a tool for the global economy”.

Huobi’s HUSB Stablecoin Recovers 1:1 US Dollar Peg

HUSD, Huobi Global stablecoin with a market cap of around $160 million, has recovered its 1:1 peg with the US dollar after falling to as low as $0.85 on Thursday. HUSD explained on Twitter that there had been a “short-term liquidity problem”, which has since been “resolved”.

Recently, we had made the decision to close several accounts in specific regions to comply with legal requirements, which included some market maker accounts. Due to the time difference in banking hours, this resulted in a short-term liquidity problem but has since been resolved.

— HUSD (@Stablecoin_HUSD) August 19, 2022

US FDIC Orders Crypto Exchange FTX US, 4 Others to Cease ‘Misleading’ Claims

The US Federal Deposit Insurance Corporation (FDIC) sent five cease and desist letters on Friday, including to FTX’s US subsidiary FTX US, lambasting the exchange for making misleading claims suggesting that their products might be insured by the agency. In the event of bank failure, the FDIC will reimburse the customers of regulated banks their deposits worth up to $250,000 per account, a powerful incentive to prevent bank runs.

Cryptocurrencies and cryptocurrency products are not covered by FDIC insurance. FTX US President Brett Harrison had previously hinted in a tweet that deposits from employers would be stored in FDIC-insured bank accounts.

Protests Planned in Amsterdam Following Tornado Cash Creator’s Arrest

Activists will take to in Amsterdam this weekend to protest the recent arrest by Dutch law enforcement of Tornado Cash developer Alex Pertsev. Xenia Malik, Pertsev’s wife, stated in an email that “the accusations against Alex threaten to greatly harm the entire segment of open-source software… This is a major issue as it can affect every open-source developer and many other people in future”.

Malik hopes the protests this weekend will bring publicity to Pertsev’s arrest. Dutch officials, as well as the US Treasury, which recently blacklisted the Tornado Cash anonymous payments service, have received significant criticism from members of the cryptocurrency community over their recent moves to clampdown on Tornado Cash, as well as arrest its creator.

Critics say that the crackdown is an attempt to violate the right to privacy and that Pertsev is not responsible for any of the potential crimes committed by those using his anonymous payments platform. Arresting a software developer for the crimes of its future users sets a bad precedent, they argue.