Bitcoin hovered near $22,000 amid a bout of stability in crypto markets, following a selloff sparked by worries about a US clampdown.
The largest token dipped less than 1% as of 1:10 p.m. Wednesday in Singapore. Smaller coins such as Ether, Cardano and Binance Coin were also little changed.
However, recent US steps such as shutting down issuance of a Binance-branded stablecoin, BUSD, have stirred fresh uncertainty for digital assets, causing some investors to sell off their holdings.
Bitcoin and other cryptocurrencies may be slowly crawling their way back to stability, but there are still some red flags indicating that institutional investors may be pulling out. For example, the CME Group Inc. futures market has seen a significant drop in open interest, which could be a sign that institutions are losing interest in crypto.
Meanwhile, the stablecoin market is in the midst of a shakeout, with many tokens losing value. This could be a sign that the market is becoming more mature, as investors become more discerning about which tokens offer real value.
Tether Holdings Ltd.’s USDT — the world’s largest stablecoin — increased circulation by about $1 billion in the past 24 hours alone, indicating the token is a beneficiary as investors move out of BUSD.
BUSD is a cog in billionaire Changpeng “CZ” Zhao’s Binance ecosystem. The US action against the stablecoin put the spotlight on the outlook for his exchange, the largest in crypto, given the industry’s history of sudden blowups.
CZ is in a tight spot. His exchange is the biggest in the industry, but with the US action against BUSD, the future is uncertain. Will Binance be able to withstand the storm? Or will it be another in a long line of exchanges that have bitten the dust? Only time will tell.