$1 billion buying pressure for Bitcoin, ETH incoming, here’s why
Bitcoin and the broader crypto market showed a strong recovery on Sunday afternoon (EST), although it was probably the most chaotic weekend in a long time. The crypto ecosystem lost another important banking partner.
The good news was that there is a bailout of Silicon Valley Bank’s (SIVB) customer funds, which means that the issuer of the USDC stablecoin, Circle, will also receive all of its funds. On the other hand, there is a coordinated shutdown of the crypto bank Signature Bank (SBNY), which is also allegedly in danger of collapsing, by the Federal Reserve (Fed) and the Treasury Department of the United States.
The conclusion is that this is a tough loss for the industry. In less than a week, the crypto sector’s central banking partners have been eliminated. Going forward, it is hard to imagine that other US banks will feel comfortable serving this industry given the intense scrutiny they will face.
Amid these events, Binance CEO Changpeng Zhao shared on Twitter a few hours ago that his crypto exchange will convert the rest of the $1 billion Industry Recovery Initiative Fund from BUSD to Bitcoin, Ethereum and Binance Coin (BNB).
Massive buying pressure on incoming Bitcoin, ETH and BNB
The Industry Recovery Fund was launched by Binance after the collapse of FTX in November 2022. The fund was intended to support cryptocurrency projects facing a liquidity crisis after the FTX crash.
The fund still includes $1 billion worth of Binance USD Coin (BUSD). In a surprise announcement today, Changpeng Zhao, the exchange’s CEO, stated that these funds will be converted into Bitcoin, Ethereum (ETH) and Binance Coin.
Given the changes in stablecoins and banks, Binance will convert the rest of the $1 billion Industry Recovery Initiative funds from BUSD into native crypto, including BTC, BNB, and ETH. Some fund movements will occur on the chain. Transparency.
All $1 trillion BUSD of the industry’s mining initiative fund was transferred to Binance shortly after the announcement, according to on-chain data provider Lookonchain.
$1B buying pressure on $BTC, $ETH and $BNB
— Ki Young Ju (@ki_young_ju) March 13, 2023
The impact of Binance’s purchase can only be speculated upon. Analyst Miles Deutscher agreed that Binance will not simply “buy $1 billion into the market” to massively affect the price. Binance has high level market makers and a very liquid exchange.
“Most of the price change will be people up front, I agree that the actual purchases may not have the impact that some people think,” said Deutscher, but also emphasized the size of the purchase orders for CZ can be:
Look at what Do Kwon’s LFG Bitcoin purchase did to the price at the time. Anyway, more of an emotion changer than anything else. There is a chance that people will go ahead.
At press time, the Bitcoin price stood at $22,456, up nearly 10% over the past 24 hours.
Featured image from CNBC, chart from TradingView.com
