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Bitfinex/Tether's Settlement With NYAG and Square's Commitment to Bitcoin Calm Market's Nerves | Cryptoglobe

source-logo  cryptoglobe.com 24 February 2021 06:29, UTC

Although the Bitcoin price went as low as $44,845 on Bitstamp yesterday (February 23), some annoucements that were made later in the day seem to have helped Bitcoin get above $50K, thereby calming the crypto market’s nerves.

According to data by TradingView, although Bitcoin started Tuesday (i.e. 00:00 UTC) around $54,173, by 11:45 UTC, the Bitcoin price had fallen to $44,845.

Five-Day BTC-USD Chart (Bitstamp) by TradingView

As you can see in the chart above, last Sunday (February 21), Bitcoin was trading on Bitstamp as high as $58,354 (at 19:05 UTC). So, what dented confidence in Bitcoin so much that two days later some people were ready to sell it for as low as $44,845, i.e. selling their BTC at a price that was over 23% lower?

Yesterday, one crypto analyst offered the following plausible explanations for Bitcoin’s price crash:

What happened:

1. Musk's and Yellen's negative comment
2. Miners taking profit
3. Deleveraging

What didn't happen:

1. Ceasefire on money printing
2. Actual choking regulation
3. Institutions and companies stopped buying

The narrative is still intact, chill.

— Lex Moskovski (@mskvsk) February 23, 2021

The chart below from Glassnode shows that on Sunday (February 21), the funding rates for perpetual swaps were above 0.12%, which is quite high. As Bybt explains, “positive funding rates suggests speculators are bullish and long traders pay funding to short traders.” Then, as the BTC price header lower toward $50K and below, the funding rate funding rate for perpetual swaps across all crypto derivatives exchanges started going down until it reached around 0.01%, which is considered a neutral position.

Funding gets to bearable levels pic.twitter.com/ulcmgYWSfC

— Lex Moskovski (@mskvsk) February 23, 2021

It is interesting that currently (as of 09:03 UTC on February 24) on Binance the funding rate for perpetual swaps is negative even though according to CryptoCompare, Bitcoin is trading around $50,541, up 5.18% vs USD in the past 24-hour period.

Source: Bybt

So, what were the announcements made yesterday that apparently stopped Bitcoin from falling to the low 40s?

Well, first, at 12:57 UTC, it was announced that Tether and Bitfinex have settled their 2.5 year dispute with the New York State Attorney General’s office.

Tether & @Bitfinex have reached a settlement with @NewYorkStateAG. After 2.5 years and 2.5M pages of info shared, we admit to no wrongdoing and will pay US$18.5M to resolve this matter. 1/3

— Tether (@Tether_to) February 23, 2021

Second, just after closing below (i.e. 21:00 UTC), FinTech firm Square (NYSE: SQ) announced fourth quarter and full year 2020 results. In its press release, Square said that it had bought another $170 million worth of Bitcoin:

Square… has purchased approximately 3,318 bitcoins at an aggregate purchase price of $170 million. Combined with Square’s previous purchase of $50 million in bitcoin, this represents approximately five percent of Square’s total cash, cash equivalents and marketable securities as of December 31, 2020.

Aligned with the company’s purpose, Square believes that cryptocurrency is an instrument of economic empowerment, providing a way for individuals to participate in a global monetary system and secure their own financial future. The investment is part of Square’s ongoing commitment to bitcoin, and the company plans to assess its aggregate investment in bitcoin relative to its other investments on an ongoing basis.

Square’s CFO told CNBC that Bitcoin “has the potential to be the native currency of the internet” and that Bitcoin is becoming an increasing par of their business.

Since Square’s announcement, on Bitstamp, the price of Bitcoin has gone from $48,404 to $50,838 (as of 09:20 UTC on February 24), which is an increase of just over 5%. What makes this price increase even more noteworthy is that it has come during Asian trading hours.

One of the partners at advisory firm and crypto hedge fund Spartan Group had this to say about the current state of the market:

Silver lining to the latest selloff:
1. Tether FUD played out
2. Leveraged wiped
3. Weak hands shaken out
4. Technicals looking the best in a few months

— SpartanBlack (@SpartanBlack_1) February 24, 2021

Around the same time, Steven McClurg, one of the co-founders of cryptoasset management firm Valkyrie, disclosed that his firm had put more Bitcoin on its corporate balance sheet.

Bitcoin on your corporate balance sheet makes a lot of sense. @LeahWald and I bought more #Bitcoin on our corporate balance sheet today on the dip. We have employees who want to be paid in bitcoin, and soon vendors will too.

— Steven McClurg (@stevenmcclurg) February 24, 2021

Featured Image by “SnapLaunch” via Pixabay.com

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.

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