RESEARCH
BEQUANT Crypto&Coffee
The first day of the trading week got off to a very rocky start and as noted by Kaiko, from one minute to the next, Bitcoin bounced between $48k, $52k, and back to $48k, it seemed that price feeds were broken, but what was actually happening was that a complete decimation of order book depth made the process of price discovery near impossible. When there is no market depth remaining on an order book, there is nothing stopping large market orders from whipsawing the price of Bitcoin. In extreme scenarios, this can cause what is known as a flash crash, which is when the withdrawal of orders amplifies price declines. A flash crash actually occurred briefly on Kraken for ETH-USD markets, which saw the price of ETH plummet below $1k, to be more precise it fell to around $750 (it had traded at $1600 moments earlier). It is not the first, not it is likely to be the last time that the underlying infrastructure of digital assets trading cripples under its own weight and thus again, gets exposed as the weakest link in its attempt to attract more institutional capital. Also of note, CoinDesk noted that Decentralized finance (DeFi) lending platforms liquidated some $25 million in assets Monday as the price of ether plummeted as much as 15% to $1,655 before somewhat rebounding. That's the highest amount in three months since Nov. 25 saw $93 million in liquidations. However, ironically so back in early February, Kraken announced that it is making its spot price data available for use by DeFi applications and developers. In other news, BNY Mellon is working with Fireblocks as part of the banking giant's plans to hold bitcoin and other crypto assets on clients' behalf, according to three people familiar with the matter. The bank said earlier this month it was working with outside partners on the crypto custody play but did not identify them. Finally, in response to these legal developments, MoneyGram has broken off its relationship with Ripple. The firm says that it has suspended trading on Ripple's platform “due to the uncertainty concerning their ongoing litigation with the SEC.” Reporting its fourth quarter results, MoneyGram now says: "The Company is not planning for any benefit from Ripple market development fees in the first quarter. Due to the uncertainty concerning their ongoing litigation with the SEC, the Company has suspended trading on Ripple's platform."
