US Regulators Target Centralized Exchanges, But Crypto Markets Remain Resilient – Cryptopolitan
US regulators crack down on cryptocurrency exchanges after the collapse of FTX. However, the crypto markets seem to be unfazed and continue their upward trend. Ethereum prices consolidated around $1,650 over the weekend, rising above levels prior to the FTX collapse.
This week’s edition looks at the renewed interest in the non-fungible token (NFT) space, fueled by recent developments surrounding the upcoming NFT marketplace and aggregator, Blur, which is challenging industry leader OpenSea. The article analyzes the effects of the Blur airdrop on OpenSea’s market dominance, assesses the sustainability of Blur’s user acquisition, and evaluates the extent to which the renewed interest in NFTs is promoting Ethereum’s network activity.
US regulators take aim at centralized exchanges
After the FTX collapse, US regulators stepped up their scrutiny of cryptocurrency exchanges. On February 8, Kraken reached a settlement with the SEC over its staking-as-a-service product, prompting the exchange to immediately suspend staking services for US citizens.
Stablecoin issuer Paxos declared it would stop minting BUSD on February 21, citing regulatory pressure from the New York State Department of Financial Services. Since February 8th, BUSD has fallen by more than 31.2%, and has seen over $5.052 billion in redemptions.
Gas prices are on the way up again
Median transaction gas prices have been consistently low over the past nine months, ranging between 10 and 20 Gwei. This equates to an average of $0.50 for a standard transaction and around $2.00 for a smart contract interaction, a fraction of the triple digits seen during the previous bull cycle.
Since the beginning of this year, however, gas costs have gradually increased, and currently stand at 38 Gwei, exceeding the gas cost spikes seen during the bear market surrounding events such as the FTX collapse and the Binance bank run. The incremental nature of gas demand suggests an early resurgence of network activity may be underway.
Interest in NFTs is rekindling
The NFT market is again showing signs of growth, with total gas consumption in NFT transactions increasing by 97% in two consecutive months. This suggests that activity around NFTs is approaching levels seen during the NFT boom.
The increase in interest in NFTs is primarily attributed to the launch of new collections by some of the industry’s biggest players such as Yuga Labs, Doodles and Moonbirds. However, closer examination shows that gas demand in the last two weeks has mainly been driven by developments around the Blur Airdrop.
Blur comes after OpenSea
Launched in October 2022, Blur, an NFT marketplace and aggregator, quickly gained traction and has since been nipping at the heels of industry leader OpenSea. As of today, Blur has captured a market share of 78% of NFT transfer volume, having passed OpenSea following the February 14 airdrop. Blur aims to be a professional trading platform for NFTs, with a zero trading fee model and optional royalty payments.
While the token has lost roughly 13% in value over the past week, the airdrop brought new attention to the upstart’s rival. As a result, Blur’s market share increased by 34%, reducing OpenSea’s share from 36% to 15%. In an attempt to counter its emerging rival, OpenSea made a bold move in restructuring its fee model and policy, but still failed to retain market share.
Despite US regulators cracking down on centralized exchanges, crypto markets remain resilient. Ethereum prices have consolidated around $1,650 and gas prices have gradually increased, suggesting an early resurgence of the network.
