The world of cryptocurrency is in the throes of significant change. Events such as the unexpected departure of Binance.US CEO Brian Shroder, and the reduction of the exchange’s staff by a third, elucidate the strenuous landscape crypto exchanges are currently navigating, particularly in the United States. The crypto industry is markedly feeling the pressure, with the Securities and Exchange Commission doggedly pursing companies it deems to be violating securities laws, as evidenced by its case against Binance.US.
In further escalating turbulence, BitMEX, the crypto derivatives exchange, is in the process of inaugurating a new product – a prediction market. This marketplace would allow traders to wager on real-world event outcomes. The concept itself is not new but has gained traction in recent times with platforms like Polymarket presenting an array of serious to whimsical contract offerings. Given Polymarket’s recent fine of $1.4 million in January 2022 for unregistered swaps, BitMEX appears to be favouring the implementation of serious contracts, such as prediction contracts on FTX’s bankruptcy recovery rate.
Meanwhile, FTX is working diligently to address concerns voiced by the U.S. Trustee, which is a division of the Department of Justice dealing with bankruptcy. It proposes to change billions in crypto assets, but the trustee has required advance public notice, warning that the sell off of upwards of $100 million of assets could destabilize crypto prices. In an attempt to find middle ground, FTX has suggested a private notice to the Justice Department and its creditors in place of a public one.
Looking at the bigger picture, since November 2022, the crypto market depth has exhibited interesting changes which highlight the market’s capacity to withstand large sales and purchases while maintaining prices stability. It seems market makers are edging towards centring liquidity in a narrower range. Yet, an overall downturn in liquidity conditions from January can prove disconcerting for the so called ‘whales’ seeking to execute substantial orders.
In sum, the world of cryptocurrency is, quite evidently, grappling with exigent challenges. Yet, the determination of exchanges to navigate these rough waters is equally clear. The intrigue lies in observing the consequences of these struggles on overall liquidity conditions and the capacity of the market to withstand these tumultuous times.
Source: Coindesk
