Cryptocurrency Market Overview 08/22/2023
News block
1. Binance: new problems in Europe
Binance's partner for fiat payments in Europe will stop providing its services on September 25. This means that the crypto exchange will stop depositing and withdrawing funds in euros for users from the EU.
The influx of new liquidity into the crypto market was already insignificant. Binance's new problems will temporarily exacerbate this situation.
Recall that Binance has recently been under serious pressure from US and EU regulatory authorities. The market share controlled by the exchange is gradually decreasing.
In the current conditions, it is not worth keeping large amounts of funds on the Binance exchange.
2. Coinbase acquired a stake in Circle
Coinbase and Circle have reached a new agreement. The largest American crypto exchange Coinbase has acquired a stake in the issuer of the USDC stablecoin company Circle. This means that Coinbase and Circle will now have even greater strategic and economic coherence regarding the future of the financial system.
From September to October 2023, the USDC stablecoin will be launched on 6 new blockchains (the total number will increase to 15 networks).
Coinbase and Circle will continue to receive revenue from USDC reserves. In accordance with the new agreement of the parties, this income will be distributed depending on the amount of USDC stored on each of the platforms.
The goal of USDC is 24/7 availability, widespread use, stability and 100% assurance (1:1), transparency and security of reserves.
3. PayPal's PYUSD passes the first listings
The American Kraken exchange announced that on August 21 it held a listing of the PYUSD stablecoin from PayPal.
You can make deposits in PYUSD only on the main Ethereum network.
Earlier, a number of other cryptocurrency exchanges also showed interest in this stablecoin.
Overview of the crypto market
🔸 The current capitalization of the crypto market is 1.094 trillion
🔸 Trading volume for the last day is $35.2 billion
🔸 BTC dominance 46.3%
🔸 Fear and Greed Index:
- today 37, yesterday 38, a week ago 52
where, 0 is extreme fear (may be a sign that investors are too scared - it's often a good time to buy), and 100 is extreme greed (the market needs correction).
The cost of the first cryptocurrency has practically not changed over the past day. The BTC price is hovering around the $26k level. At the same time, as history shows, the collapse of the price last week is not a unique event. Similar situations have been observed quite often before:
However, it is worth considering that September is approaching, and statistically this is the worst month of the year for the BTC price:
The next big step for DeFi
The current bear market has been tough for most of the DeFi tokens. So the DeFi Pulse index, which consists of the largest DeFi tokens, such as UNI, LDO, AAVE, CRV and some others, has been in collapse mode for a long time:
This is partly due to the fact that some of these tokens have no real utility (do not generate income) and only give the right to manage the protocol.
But this is certainly not the only reason.
The total amount of blocked funds in DeFi continues to decline, despite a significant improvement in the quality of many decentralized applications over the past 2 years.
Why is this happening?
The heyday of DeFi came in 2020, when interest rates were very low. It didn't make sense to keep money in banks.
Several large DeFi protocols have realized that they can take advantage of this. Thanks to the liquidity mining incentives, they were able to offer very attractive returns and attract a lot of liquidity.
Now the situation has changed dramatically.
The Fed has been aggressively raising interest rates over the past few months and the yield on Treasury bonds, which are considered almost risk-free, is now very high.
At the same time, the profitability of DeFi protocols, which are considered relatively safe, has declined sharply, mainly because the market capitalization of their tokens has fallen dramatically. In addition, interacting with DeFi also involves the risk of smart contracts, so for many people it just doesn't make sense at this point in time.
How can DeFi become attractive again?
It seems that the MakerDAO protocol has found the answer to this question.
MakerDAO is the issuer of the largest DAI stablecoin.
Just a few days ago, MakerDAO offered everyone who has DAI to earn 5% per annum.
Such income is possible thanks to MakerDAO investments in real assets (treasury bonds). At the moment, more than 50% of the DAI offer is secured by real assets that bring income to the protocol.
So why does this 5% yield matter so much?
In just a few days, DAI's capitalization has grown from $4.44 billion to $5.35 billion, which clearly shows that there is a great demand for decentralized products that can also provide high sustainable returns.
Other major DeFi protocols (AAVE, Frax Finance) are also showing interest in gaining access to real assets, which should support the entire DeFi sphere.
