The US regulators have been cracking down on the crypto space for some time now. As a result, it becomes more difficult for companies to access USD to purchase digital assets.
The total number of payment providers in the United States is dwindling and stablecoins, which have been the basis of crypto, have also seen their dominance diminish since the collapse of the crypto exchange FTX.
Given the trading volume of the world’s largest cryptocurrency, dollar-denominated BTC has continued to fall. On the other hand, Bitcoin pairs in Euro and Tether have been gaining popularity since November 2022. In its Monday, March 6 report, blockchain analytics firm Kaiko reported:
The euro certainly presents an opportunity, but when we look at the volume market share for USD-denominated pairs, we see a broader story emerging: that of the declining use of the dollar in crypto. Since the collapse of the FTX, USD market share has consistently fallen against the USDT, USDC and Euro trading pairs.
Clara Medalie, director of research at Kaiko, said the fall in the USD following the collapse of FTX could be largely related to a decline in institutional trading activity. She added that institutional trading desks usually prefer to settle their trades in dollars rather than stablecoins.
Stablecoins on the rise in the crypto market
In the past, traditional banking platforms have played a key role as a reliable gateway between crypto platforms and hard currency. But amid the collapse of FTX, US banks have reduced their association with crypto companies.
Amid the recent demise of crypto-focused bank Silvergate Capital, stablecoins are once again gaining popularity among traders. In his report, Kaiko stated that the number of fiat trading pairs listed by exchanges has fallen since the rise of stablecoins. Last year in 2022, the total number of dollar-denominated trading pairs across all crypto exchanges fell from 400 a year ago to 326. On the other hand, euro-denominated trading pairs jumped from 96 to 125.
Cryptomarket bearish sentiment
Following last week’s correction, the broader crypto market has consolidated. But on-chain data from CryptoQuant shows that funding rates have dropped and overall sentiment has remained largely bearish. CryptoQuant contributor caueconomy writes:
The funding rate of perpetual futures normally indicates the current market preference, after which traders build short positions. If we have more leverage and bearish bets in this setup, we could have a price recovery driven by cascading short liquidations.
The market is mostly bearish and betting on further declines, according to funding rates.
“If we have more leverage and bearish bets in this setup, we could have a price recovery driven by cascading short liquidations.”
Through @caueconomyLink👇https://t.co/p3niSTaUd6
— CryptoQuant.com (@cryptoquant_com) March 7, 2023
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