Bitcoin Records Largest Loss In Five Months; cBTC Goes Live
Bitcoin, the largest crypto asset by market cap, is struggling as selling pressure keeps rising amid a US bond yield increase. Accordingly, the token saw its market value tumble by 9% to $26,700, posting its most significant single-week loss since last November, as revealed by TradingView data.
Bitcoin Tumbles Amid Dollar Liquidity Decline
Bitcoin and the broader crypto market have closely moved with the highs and lows of the USD liquidity index since 2021. The asset rose to its then-high of $28,000 in March 2023 after the US Federal Reserve untightened the liquidity ratio to manage the recent bank crisis.
This increased the USD liquidity index to $6.35 trillion from $5.82 trillion. However, Bitcoin continues its steady decline on Monday along with other top crypto assets.
Meanwhile, Noelle Acheson, a top crypto industry analyst, opined that BTC’s decline is due to the lack of positive signs from the liquidity side. Acheson further noted that while Bitcoin is regarded as an “insurance asset” expected to outperform other assets when some tokens are underperforming, it is still significantly impacted by the broader macroeconomic direction.
The analyst added that the broader macroeconomic condition is driven mainly by the monetary liquidation expectation put in place by the Fed. Another analyst at the Paris-based Kaiko, Dessislava Laneva, explained that Bitcoin and the broader financial markets would likely experience high price swings in the short term because of US’ debt limitation problems.
In January, the US government announced that it had reached the statutory debt limit of $31.4 trillion. Thus, the Treasury Department had to adopt strict measures to help the federal government meets its debt obligations for five months.
These measures aimed at boosting the dollar liquidity ratio. However, these debt limitation solutions by the Treasury haven’t yielded the desired result.
Hence, financial market players are worried that the Treasury may run out of money to maintain the government debt default by June. Still, some experts believe it is unlikely that the United States will fall into a debt default, as some of their colleagues initially feared.
According to Tom Dunleavy, an analyst at Messari, any potential default would see Bitcoin becoming a haven as it did during the US banking crisis last March. Dunleavy believes the US will resolve the debt limit issue before it goes out of hand.
He added that if the US eventually defaults on its debt, it would be an immense positive for Bitcoin. The asset will become more attractive, especially after the recent bank collapses.
Wrapped BTC Token Goes Live On Cardano Testnet
Meanwhile, Cardano developers aim to attract Bitcoin users to the Cardano decentralized finance (DeFi) protocol by adding a wrapped BTC token (cBTC) to the platform. Accordingly, the cBTC is now live on the Cardano Testnet, with users able to mint the asset from the anetaBTC protocol.
In addition, users could use the token to trade, fund, or provide more liquidity to the Cardano ecosystem. The wrapped BTC token is at 1:1 to Bitcoin and is only on the Cardano blockchain.
According to a Cardano developer, wrapped tokens are crucial because they make it possible to transfer value across blockchains. This enhances interoperability and enables users to access numerous DeFi platforms without acquiring the native coins of that protocol.
Since the start of the year, several DeFi improvements have helped raise the value of these wrapped tokens on the Cardano network. Consequently, the network’s total value locked (TVL) rose to over $150 million from below $50 million from January till date.
Hence, it is no surprise that some DeFi exchanges like Minswap, Wingriders, and Indigo reportedly hold a significant portion of the TVL on the Cardano blockchain. Meanwhile, Cardano’s stablecoin project Djed has more than $15 million in TVL since its launch in the first week of March.
Tokenhell produces content exposure for over 5,000 crypto companies and you can be one of them too! Contact at info@tokenhell.com if you have any questions. Cryptocurrencies are highly volatile, conduct your own research before making any investment decisions. Some of the posts on this website are guest posts or paid posts that are not written by Tokenhell authors (namely Crypto Cable , Sponsored Articles and Press Release content) and the views expressed in these types of posts do not reflect the views of this website. Tokenhell is not responsible for the content, accuracy, quality, advertising, products or any other content or banners (ad space) posted on the site. Read full terms and conditions / disclaimer.
