BTC and ETH bounce back unexpectedly, while Tether freezes FTX-owned $46M in USDT

The battles in the crypto market related to the FTX collapse continue. So, to protect themselves, many companies are trying to cut ties with the exchange so as not to lose money or damage their reputation. One of the latest such moves was made by Tether Limited, which froze the native stackable USDT belonging to FTX on the Tron blockchain. The reasons and consequences are discussed below. 

What is known?

Once FTX began having problems with its liquidity crisis, the Securities and Exchange Commission and the Department of Justice launched an investigation. The situation also affected USDT, causing the peg to fluctuate on major exchanges, including Binance. However, once the value of the coin recovered from the $0.9381 drop on the Kraken platform, Tether froze the $46M it owned on FTX. Reportedly, the action was not taken by the company itself, but at the request of law enforcement and for the period until the investigation will be closed. 

According to CoinDesk, the frozen funds are stored on the Tron blockchain, which handles more than 50% of all existing USDT. It is worth mentioning that this is the first time that the freeze has affected funds on the cryptocurrency exchange. 

This is not the first time that Tether has frozen its stablecoins. Often, it has also taken place at the instigation of law enforcement agencies after cases of hacking and any illegal actions. 

Meanwhile, while traders and other market participants are monitoring the situation with the USDT peg, Tron founder Justin Sun said that his company is doing everything to prevent further problems in the market. 

The businessman planned to solve the problems with the TRON DAO reserve, according to Blockworks. He promised to buy $1M worth of USDT and then another $300M on the open market, and thus “protect the entire industry.” But whether something like that happened or not, nobody knows and nobody will know, because the stablecoin has already recovered its positions, as we wrote earlier. 

Experts, on the other hand, point out that the situation with Tether is not entirely clear. Like other stablecoins, mostly USDT fluctuations are little noticeable, but it’s different now. If market participants exchange their stablecoins massively for other cryptocurrencies, the link with the dollar could be broken. 

CTO of Tether Limited, Paolo Ardoino, reported on Twitter that the company is not considering options to save FTX. However, the head of FTX has already discussed fundraising with the creator of Tron, Justin Sun, and the latter even put forward a number of conditions, which are more like a mockery than real help. 

Bitcoin and Ethereum rebound

At the same time, on the market as a whole, the situation has normalized. For the last 24 hours the market capitalization grew by 4.05% and reached $871.53B. The main digital assets went up. The main rebound was made by the top 2 cryptocurrencies — Bitcoin and Ethereum. 

Bitcoin is up 4,65% to $17286, owing to weaker-than-expected CPI figures, it says that the US Fed may slow down on upcoming rate hikes. The 24-hour trading volume is $64B. The token added more than 4% during the Asian session and has a market capitalization of $332.21B according to CoinMarketCap.

Now BTC has already overcome the $16K support level, indicating that the coin is in a bullish trend. However, it is too early to rejoice, as Bitcoin could fall again if it fails to overcome the 38.2% Fibonacci retracement level of $18.25.

The second-largest cryptocurrency, Ethereum, is now trading at $1281 per coin, with daily trading volume of $24B. In the last 24 hours, the token has risen 7.53% and has a market capitalization of about $159B.

Thanks to the rebound, the coin regained the level of $1280 on the daily chart. According to analysts, near-term resistance at $1370 is likely to persist, as confirmed by the 50-day moving average. And in the long run, that could lead Ethereum to soar above $1.5K. 

As for dropping below $1K, that is unlikely because the $1170 and $1095 support levels will persist. However, don’t get your hopes up just yet, but keep following the market situation.