2023-3-13 10:58 |
Bitcoin and the broader crypto market showed a strong recovery on Sunday afternoon (EST), although it was probably the most chaotic weekend in a long time. The crypto ecosystem lost another key banking partner.
The good news was that there is a bailout of Silicon Valley Bank’s (SIVB) customer funds, which means that the issuer of the USDC stablecoin, Circle, will also receive all of its funds. On the other hand, there is a coordinated shutdown of the crypto bank Signature Bank (SBNY), which is allegedly also in danger of collapse, by the Federal Reserve (Fed) and the Treasury Department in the US.
The bottom line is that this is a tough loss for the industry. In less than a week, the crypto sector’s key banking partners have been eliminated. Going forward, it is hard to imagine other U.S. banks will feel comfortable servicing this industry given the intense scrutiny they will face.
Amidst these events, Binance CEO Changpeng Zhao shared on Twitter a few hours ago that his crypto exchange will convert the remainder of the $1 billion in Industry Recovery Initiative Fund from BUSD into Bitcoin, Ethereum, and Binance Coin (BNB).
Massive Buying Pressure On Bitcoin, ETH and BNB IncomingThe Industry Recovery Fund was launched by Binance after the collapse of FTX in November 2022. The fund was meant to support cryptocurrency projects facing a liquidity crisis after the FTX crash.
The fund still includes $1 billion worth of Binance USD Coin (BUSD). In a surprising announcement today, Changpeng Zhao, the exchange’s CEO, stated that these funds will be converted into Bitcoin, Ethereum (ETH) and Binance Coin.
Given the changes in stable coins and banks, Binance will convert the remaining of the $1 billion Industry Recovery Initiative funds from BUSD to native crypto, including BTC, BNB and ETH. Some fund movements will occur on-chain. Transparency.
All $1 trillion BUSD of the industry recovery initiative fund was transferred to Binance shortly after the announcement, according to on-chain data provider Lookonchain.
$1B buying pressure on $BTC, $ETH and $BNB https://t.co/WOm2AOcOVR
— Ki Young Ju (@ki_young_ju) March 13, 2023
The impact of Binance’s purchase can only be speculated. Analyst Miles Deutscher did agree that Binance will not simply “buy $1 billion dollars on the market” in order to massively influence the price. Binance has high-level market makers and a very liquid exchange.
“Most of the price change will be people front running, I agree the actual buys may not have the impact some think,” Deutscher said but also emphasized the magnitude the buy orders of CZ can have:
Look at what Do Kwon’s LFG Bitcoin buys did to the price back in the day. Regardless, more of a sentiment shifter than anything. There’s a chance people front run.
At press time, the Bitcoin price stood at $22,456, up almost 10% within the last 24 hours.
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