Latest news with #USD-pegged
Mint
14-07-2025
- Business
- Mint
US passes GENIUS Act: Could the new cryptocurrency law trigger the next global financial crisis?
On June 17, the US Senate passed the GENIUS Act, aiming to regulate a type of cryptocurrency known as 'stablecoins'. Even though this move is viewed as a big win for the cryptocurrency sector, a closer look at the law reveals how it could, quite easily, lead to the next global economic crash. People are increasingly investing in crypto because its volatile value can lead to huge returns on investment. For instance, Bitcoin (BTC), the oldest cryptocurrency on record, surged the most on Monday by climbing over $120,000 per BTC. Since the factors that determine its price are often unclear, crypto investment is essentially a roll of the dice. Making profits on crypto trading is often as likely as winning at roulette. The crypto industry realised that the high volatility and unpredictability of crypto currencies will pose a barrier in attracting more risk-averse investors, reported The Conversation. Hence, to create the appearance of stability, companies began to create 'stablecoins'—cryptocurrencies whose prices are pegged to another currency. In this case, the companies had to hold an equivalent amount of pegged currency in reserve so that the investors could sell the currencies anytime and demand the sale amount in that particular currency. Now that the GENIUS Act has passed through the US Senate, big companies like Amazon and Walmart are already planning to issue their own stablecoins for customers. Since the GENIUS Act will actively regulate stablecoins, people may believe that all stablecoins are equally safe. However, this is impossible to guarantee, and several questions remain about how businesses will leverage their own stablecoins to their advantage. The potential for stablecoins to trigger a financial crisis draws parallels to historical currency crises, where a country, instead of a company, issues a pegged currency. Argentina is one such example. From 1991 to 2002, the Argentinian Central Bank promised to exchange one peso for $1, but this artificial peg distorted trade and ultimately led to economic collapse when it was removed. If big US companies start issuing USD-pegged stablecoins during their successful period and later their finances take a turn for the worse, it would cause a bigger crisis in the market. The company would finance the coins with assets such as US treasury bills or bonds to guarantee the coin's value. The Conversation report points out that if one company collapses, it would set off a chain reaction. Investors would then start returning stablecoins, prompting the company to sell off its USD holdings (US treasury bills) to calm nervous investors. The impacts might soon start to ripple outwards. A selloff of US bonds would decrease the price of bonds themselves, causing US interest rates to spike. A sudden, unexpected, and drastic increase in US interest rates could easily translate into a global financial crisis, as banks and governments all around the world would suddenly face solvency crises. Despite the regulators ensuring that the companies have enough reserves to fulfil their promises if investors start to panic, there's a high chance that things might take a turn. Just a few years ago, they failed to notice that Silicon Valley Bank had too many assets at risk of an increase in interest rates, an oversight that caused the bank to collapse in 2023. It is therefore not difficult to imagine a situation where multiple companies are able to irresponsibly issue too many stablecoins. If this happens, the consequences could be dire, not just for the US, but for the entire global economy, the publication reported.
Yahoo
06-06-2025
- Business
- Yahoo
Circle Shares Rocket 20% Premarket After IPO Surge
Circle Internet Group (NYSE:CRCL) kicked off Friday with a 20% premarket pop, building on Thursday's epic 169% debut when shares soared to $83.54 from the $31 IPO price. Thursday's upsized offering raised nearly $1.1 billion by selling 34 million shares at $31 eachwell above the originally marketed $27$28 range and far beyond last week's $24 $26 window. As issuer of the USDC stablecoin, Circle boasts a circulating supply near $61.5 billion, underscoring why investors piled in: USDC sits just behind Tether as the second-largest stablecoin, and demand for stable, USD-pegged tokens has surged amid broader crypto volatility. Circle's IPO success reflects Wall Street's growing appetite for fintech plays that offer digital-currency exposure without direct crypto price swings; Circle earns revenue from transaction fees and interest-bearing reserves, a model that resonated after the IPO price hike. Behind the scenes, Circle plans to channel this fresh capital into expanding USDC's global footprint, bolstering partnerships with financial institutions, and developing new products to bridge traditional finance with digital currency rails. Even after such a blockbuster debut, the company is under pressure to prove that USDC growth and partnerships can sustain long-term revenue. Investors should care because Circle's performance is a bellwether for the stablecoin sector's credibility in public markets: a sustained rally could spur more crypto infrastructure firms to seek listings, while any stumble might spook a market still digesting regulatory uncertainty around digital assets. Looking ahead, traders will zero in on Circle's upcoming quarterly report for metrics like USDC transaction volumes, net interest income, and new partnership announcements, which will be crucial in determining whether CRCL can maintain its momentum or settle into more typical post-IPO trading patterns. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-05-2025
- Business
- Yahoo
Analyst has a blunt response to billionaire Ray Dalio on the U.S. 'going broke'
Crypto markets have gained new momentum as traders respond to Ray Dalio's dire warning about U.S. debt and the dollar's decline. On May 19, Bridgewater founder Ray Dalio raised concerns, criticizing Moody's recent decision to downgrade the U.S. credit rating, which he claimed still underestimates the actual risk, which is America's $36.2 trillion debt. The U.S. government may print money to pay for the debt, he cautioned, causing the dollar to weaken and the purchasing power of bondholders to be eroded. In December 2024, Ray Dalio also urged investors to opt for Bitcoin over debt assets like bonds. Bitunix analysts expect Dalio's comments to further shift cash into non-sovereign, inflation-insensitive assets. They say Bitcoin and Ethereum as the primary beneficiaries of the transition since both have decentralized networks and limited supply. "If Bitcoin holds the $100,000 level, we expect a breakout toward $110,000 in the near term," Bitunix analysts told TheStreet Roundtable. The company recommends that investors focus on major cryptocurrencies and take USD-pegged stablecoins and utility tokens that can withstand inflation. Analysts say traders should also watch U.S. government bond rates and spending plans closely, since these are causing money to move back and forth between traditional markets and cryptocurrencies. Analysts said traders should also pay close attention to U.S. bond yields and fiscal policy, which continue to switch capital between conventional markets and crypto. If the U.S. spends too much or borrows too much, it potentially leads to money printing, which can produce inflation and weaken the dollar-driving investors to crypto. Tim Draper, an American venture capital investor, also reinforces this view, claiming that Bitcoin will become the world's currency in ten years, usurping the U.S. dollar. Now that all three major rating agencies have downgraded U.S. debt, the appeal of crypto as a hedge continues to climb. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
21-05-2025
- Business
- Yahoo
These Six Charts Explain Why Bitcoin's Recent Move to Over $100K May Be More Durable Than January's Run
Bitcoin BTC is trading above $100,000 again, and investors, prone to recency bias, may be quick to assume that this event will play out like it did in December-January, when the bull momentum faded, with prices quickly falling back into six figures, eventually dropping as low as $75,000. However, according to the following six charts, the bitcoin market now appears sturdier than in December-January, suggesting a higher probability of a continued move higher. Financial conditions refer to various economic variables, including interest rates, inflation, credit availability, and market liquidity. These are influenced by the benchmark government bond yield, the U.S. 10-year Treasury yield, the dollar exchange rate and other factors. Tighter financial conditions disincentivize risk-taking in financial markets and the economy, while easier conditions have the opposite effect. As of writing, financial conditions, represented by the 10-year yield and the dollar index, appear much easier than in January, favoring a sustained move higher in BTC. At press time, the dollar index, which measures the greenback's value against major currencies, stood at 99.60, down 9% from highs above 109.00 in January. The yield on the U.S. 10-year Treasury note stood at 4.52%, down 30 basis points from the high of 4.8% in January. The 30-year yield has risen above 5%, revisiting levels seen in January, but is largely seen as positive for bitcoin and gold. The combined market capitalization of the top two USD-pegged stablecoins, USDT and USDC, has reached a record high of $151 billion. That's nearly 9% higher than the average $139 billion in December-January, according to data source TradingView. In other words, a greater amount of dry powder is now available for potential investments in bitcoin and other cryptocurrencies. BTC's run higher from early April lows near $75,000 is characterized by institutions predominantly taking bullish directional bets rather than arbitrage bets. That's evident by the booming inflows into the U.S.-listed spot bitcoin exchange-traded funds (ETFs) and the still subdued open interest in the CME BTC futures. According to data source Velo, the notional open interest in the CME bitcoin futures has jumped to $17 billion, the highest since Feb. 20. Still, it remains well below the December high of $22.79 billion. On the contrary, the cumulative inflows into the 11 spot ETFs now stand at a record $42.7 billion versus $39.8 billion in January, according to data source Farside Investors. Historically, interim and major bitcoin tops, including the December-January one, have been characterized by speculative fervour in the broader market, leading to a sharp rise in market valuations for non-serious tokens such as DOGE and SHIB. There are no such signs now, with the combined market cap of DOGE and SHIB well below their January highs. The bitcoin perpetual futures market shows demand for bullish leveraged bets, understandably so, considering BTC is trading near record highs. However, the overall positioning remains light, with no signs of excess leverage build-up or bullish overheating, as evidenced by funding rates hovering well below highs seen in December. The chart shows funding rates, which refer to the cost of holding perpetual futures bets. The positive figure indicates a bias for longs and willingness among the bulls to pay shorts to keep their positions open. It's a sign of bullish market sentiment. The bitcoin market appears much calmer this time, with Deribit's DVOL index, measuring the 30-day expected or implied volatility, significantly lower than levels observed in December-January and March 2024 price tops. The low IV suggests traders are not pricing in the extreme price swings or uncertainty that typically exists in an overheated market, indicating a more measured and potentially more sustainable uptrend. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
17-04-2025
- Business
- Yahoo
DWF Labs buys Trump-linked WLFI tokens worth $25M
DWF Labs, the crypto market maker and Web3 investment firm, purchased $25 million in World Liberty Financial (WLFI) governance tokens in a strategic private transaction, the firm announced on Apr. 16. The statement said the firm aims to drive liquidity to USD1, the USD-pegged stablecoin launched by World Liberty Financial. It also announced its strategic expansion to the U.S. with a new office in New York City. DWF Labs said it also plans to strengthen institutional partnerships with banks and financial institutions exploring blockchain integration and enhance regulatory engagement with U.S. policymakers. World Liberty Financial co-founder Zak Folkman said, 'As our partner, we expect DWF Labs to help accelerate the next-generation infrastructure we're actively building and deploying at WLFI.' World Liberty Financial is a decentralized finance (DeFi) protocol in which the Trump family holds a 60% stake. While President Donald Trump himself is the chief crypto advocate at the project, his sons Eric, Donald Jr., and Barron act as ambassadors. The USD1 stablecoin is one of the first projects launched by the DeFi protocol. It is 100% backed by short-term U.S. government treasuries, USD deposits, and other cash equivalents. The stablecoin has a market cap of $127.78 million as of Apr. 16, as per CoinMarketCap. As per Arkham, World Liberty Financial owns more than $93 million in tokens, including $25.42 million in USDC, $13.69 million in Wrapped Bitcoin, $12.58 million in Ethereum, $10.98 million in USDT, and $10.35 million in TRX. The crypto market cap has declined 3.7% over the last 24 hours to $.273 trillion on Apr. 16. Sign in to access your portfolio
