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Crypto in the U.S. and Europe, what’s important right now?

Andrew Zhoao

News editor

Mar 29, 2023 at 11:08

Crisis in banks, Bitcoin hash rate growth, new restrictions on cryptocurrencies in Europe. Not only does the industry seem to be evolving, but it is also partly cracking at the seams. The situation in the U.S. and Europe is different, but there are similarities. What you need to be aware of now is outlined below.

The U.S. banking crisis as a catalyst for crypto growth

Recently we cited metrics that show the U.S. banking crisis continues, although regulators have managed to camouflage its manifestations in public.

In this regard, Bloomberg Intelligence senior strategist Mike McGlone notes that Bitcoin was born after the 2008-2009 financial crisis precisely as an anti-crisis solution. In his opinion, BTC is becoming more and more similar to gold and U.S. Treasuries, but in a more advanced, digital version.

In his turn, Chris Berniske, partner at Place Holder and former head of Ark Invest cryptocurrency company, believes that although the U.S. pressure on the crypto industry will have short-term consequences, now is the ideal time to think about the future and buy Bitcoin and Ethereum, because cryptocurrency is designed for long-term protection against such financial crises and inflation.

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Hashrate as a financial indicator

According to Glassnode, the current stage of Bitcoin’s hashrate growth is the second most intense result in BTC’s history; it only grew more aggressively after the end of the 2019 bear market.

We suggest looking at hashrate not as a technical indicator as usual but as a specific financial indicator.

Investing in mining is a reliable indicator of a bull market, as any long-term investment requires the business to have strong confidence in the payback. The current prolonged rise in the hash rate shows that players are confidently betting their money on the future growth of the Bitcoin market.

Bitcoin Hash rate adjustment percent change - 3M
Bitcoin: Hash rate adjustment percent change – 3M

New restrictions on crypto in Europe

Unfortunately, yesterday, EU lawmakers voted to restrict large payments based on anonymous cryptocurrencies. This law may directly affect cold (or hardware) wallets, where identification is not provided in principle. It is not yet fully clear how technically these laws will be implemented; we need to wait for law enforcement practice.

Recall that Europe now ranks first in the world in terms of the number of crypto startups.

According to a new study by investment company Rockwaу, Europe ranks first in the world for the number of registered cryptocurrency projects — 3,977 crypto-firms are based here. The U.S., in second place, has 3,357 organizations, while Asia has about 1,590 digital asset companies.

Global crypto VC investment by startup HQ
Global crypto VC investment by startup HQ

In addition, here is a chart below of the most active Crypto VC jurisdictions by the end of 2022.

Most active crypto jurisdictions in 2022 Source Cryptorank
Most active crypto jurisdictions in 2022 Source: Cryptorank

Once again, the insiders trail

A few hours before the CFTC’s indictment of Binance, there was an abnormal jump in withdrawals of large amounts of stablecoins (by $1.5 billion in just 12 hours). As you can see on the chart below, no abnormal activity was recorded on other exchanges at that time, so it is quite difficult to explain such a jump except for on the inside. It is noteworthy that, based on this data from onchain analysts, Binance itself reports an outflow of $850 million, which is almost two times lower.

An hour after the CFTC charge was announced, another $240 million was withdrawn from Binance (crowd reaction to FUD).

Exchange stablecoin outflow
Exchange stablecoin outflow

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