The crypto market has been showing unexpected resilience, shrugging off a week of worse than expected economic data and SEC actions.
US CPI for the month of January was released on Tuesday and was lower (6.4%) than before (6.5%), but it did not meet the forecast (6.2%). Retail sales, the foremost indicator of consumer spending, surged in January by the most in almost two years. It soared by 3%.
On Monday, Paxos, the issuer of BUSD, received a notice from the SEC, alleging that BUSD is a security and that the firm should have registered the offering under the federal securities laws. While Paxos disagrees with the SEC, they will cease the issuance of new BUSD tokens, but will continue to manage all reserves and redemptions through at least February 2024.
Binance CEO, Changpeng “CZ” Zhao, said through a tweet that the exchange will continue to support BUSD, but indicated that the BUSD marketcap will only decrease over time while users migrate to other stablecoins.
Under normal circumstances, strong economic data and regulatory concerns would spook the market for a longer period of time. But this time, the market took only four days to return to last week’s levels.
So, what was it that led the move higher?
There are two apparent catalysts. The first seems to simply be volume. According to Lookonchain, funds/institutions withdrew nearly $1.6b USDC from Circle since February 10th and deposited it into exchanges, which indicates buying.
The second catalyst is most likely the fact that altcoin profits were taken into BTC. This would explain why most major altcoins are not outperforming, that BTC moved 10% on Thursday, and that BTC dominance was up by 3% at one point this week.
On the altcoin side: zkEVM has been a topic of discussion. Early in the week, Polygon set March 27th as the date for its zkEVM Mainnet Beta to go live. MATIC was able to break November’s resistance of $1.3. It is currently trading at $1.43. Furthermore, zkSync announced yesterday that its zkEVM mainnet is finally open to builders, after its testnet performed well with 497k active addresses and 9 million transactions. IMX, MINA, and LRC have all performed well around this narrative.
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