Stablecoins Face Crucial Regulatory Distinction: White House Advisor Rejects Bank Deposit Classification

BitcoinWorld Stablecoins Face Crucial Regulatory Distinction: White House Advisor Rejects Bank Deposit Classification WASHINGTON, D.C. — A pivotal regulatory debate is reshaping the future of digital finance as White House advisor Patrick Witt asserts a fundamental distinction: stablecoins are not bank deposits. This clarification comes directly in response to recent comments from JPMorgan Chase CEO Jamie Dimon and centers on the impending GENIUS Act. Consequently, the financial world now closely watches how lawmakers will define these digital assets. Furthermore, this classification carries immense implications for consumer protection, monetary policy, and financial innovation. Stablecoins and the Core Regulatory Debate Patrick Witt, serving as Executive Director of the White House’s crypto advisory committee, recently addressed a critical issue in digital asset policy. He specifically pushed back against the notion that stablecoins should automatically fall under traditional banking rules. This response followed public statements from Jamie Dimon, who leads the largest bank in the United States. Dimon had previously warned that crypto firms paying interest on stablecoins must face the same stringent regulations as banks. Otherwise, he argued, the public could ultimately pay a significant price for regulatory gaps. Witt, however, redirected the conversation to a more technical foundation. He emphasized that the core issue is not merely the payment of interest. Instead, the act of lending or rehypothecating the dollar reserves backing a stablecoin creates the regulatory trigger. This precise distinction forms the bedrock of the proposed regulatory framework. The debate therefore hinges on the specific operational activities of an issuer, not the asset’s superficial characteristics. The GENIUS Act’s Prohibitive Framework The proposed legislation, known as the GENIUS Act, explicitly addresses these concerns. It contains clear prohibitions that prevent stablecoin issuers from engaging in certain activities with their reserve assets. Specifically, the act bars issuers from lending out customer funds held in reserve. Additionally, it prohibits using these reserves as collateral for other transactions. This structure intentionally creates a firewall between the stablecoin’s backing and traditional fractional-reserve banking. Reserve Segregation: Customer funds must be held in secure, segregated accounts. No Lending: Issuers cannot lend out reserve assets to generate revenue. No Rehypothecation: Reserves cannot be used as collateral for other loans or bets. Transparency Mandates: Regular, audited reporting on reserve composition and custody is required. Given this proposed legal structure, Witt stressed that it becomes difficult to view stablecoins as conceptually identical to bank deposits. Bank deposits inherently involve the institution using those funds for lending and investment, a practice explicitly forbidden for compliant stablecoin issuers under the GENIUS Act. Understanding the Bank Deposit Comparison To grasp the significance of this distinction, one must understand how traditional bank deposits function. When a customer deposits money into a checking or savings account, the bank does not simply store that cash in a vault. Regulators permit banks to use a large portion of those deposits to issue loans, purchase securities, and engage in other profit-generating activities. This system, known as fractional-reserve banking, relies on the assumption that not all depositors will withdraw their funds simultaneously. Key Differences: Stablecoins vs. Bank Deposits Feature Traditional Bank Deposit Proposed Compliant Stablecoin Use of Funds Funds are lent out (fractional reserve). Reserves are held 1:1 and cannot be lent. Government Insurance Typically insured by FDIC up to $250,000. No federal deposit insurance (proposed). Interest Generation Interest paid from bank’s lending profits. Interest, if any, must come from other revenue. Regulatory Oversight Oversight by FDIC, Federal Reserve, OCC. Oversight likely by state money transmitters or new federal charter. Primary Risk Bank insolvency (mitigated by insurance). Custody risk, reserve asset quality, issuer insolvency. This operational chasm forms the basis of Witt’s argument. A fully reserved, non-lending stablecoin operates more like a digital form of cash held in trust rather than a deposit placed into the credit system. The regulatory response, therefore, should match the actual risk profile instead of applying a one-size-fits-all banking model. Historical Context and the Path to Regulation The debate over stablecoin regulation did not emerge overnight. It follows a decade of rapid innovation and several high-profile failures in the crypto sector. Notably, the collapse of the algorithmic stablecoin TerraUSD (UST) in 2022 demonstrated the severe risks of unstable backing models. That event catalyzed global regulators and U.S. lawmakers to accelerate work on a regulatory framework for asset-backed stablecoins. Simultaneously, the rise of dollar-pegged tokens like Tether (USDT) and USD Coin (USDC), which collectively hold over $100 billion in market value, has forced the issue onto the legislative agenda. These tokens now facilitate trillions of dollars in annual trading volume on crypto exchanges and are increasingly used for cross-border payments and settlements. Their systemic importance makes clear regulatory rules an urgent priority for financial stability. Expert Perspectives on the Classification Financial law experts generally support a nuanced approach. Professor Lev Menand of Columbia Law School, a former Treasury official, notes that the legal classification should follow economic function. “If a stablecoin issuer acts purely as a custodian of cash and short-term treasuries, and does not engage in maturity transformation, it is not performing a banking function,” Menand has stated in prior analyses. This view aligns with the principle-based approach Witt advocates. Conversely, banking industry representatives often echo Dimon’s concerns. They argue that any financial product offering a stable value and potential yield will inevitably compete with bank deposits. This competition could theoretically weaken bank balance sheets and reduce lending capacity if significant capital flows into stablecoins. The banking lobby therefore prefers a stringent regulatory regime that levels the competitive playing field. Potential Impacts on Consumers and Markets The final classification of stablecoins will have profound real-world consequences. For consumers, a non-bank model could mean faster and cheaper transactions but without FDIC insurance protections. For the broader market, clear rules could unlock significant innovation in payments, while reducing the “shadow banking” risks associated with unregulated entities. Major technology and payments companies are already positioning themselves for this new framework. For instance, a compliant stablecoin could enable instant global payments at low cost, challenging existing wire and card networks. However, this efficiency gain must be balanced against rigorous standards for reserve auditing and issuer solvency to prevent another crisis of confidence. Ultimately, the goal of legislation like the GENIUS Act is to provide certainty. Market participants need to know the rules before deploying massive capital into new financial infrastructures. Witt’s comments serve to clarify the administration’s thinking: regulation should be fit-for-purpose, not merely an extension of old rules to new technology. Conclusion The assertion by White House advisor Patrick Witt that stablecoins are not bank deposits marks a critical moment in the maturation of digital asset policy. It draws a clear line based on the fundamental activities of lending and rehypothecation, activities the proposed GENIUS Act seeks to prohibit. This distinction aims to create a regulatory path for innovation while addressing legitimate concerns about financial stability and consumer protection. As Congress considers this and other frameworks, the evolving debate will continue to shape whether stablecoins become a mainstream payment tool or remain a niche financial product. The outcome will hinge on finding a balance between fostering innovation and ensuring a secure, stable financial system for all users. FAQs Q1: What is the main argument for why stablecoins are not bank deposits? The core argument centers on the use of reserves. Traditional banks lend out deposit funds, while the proposed GENIUS Act would prohibit stablecoin issuers from lending or rehypothecating their dollar reserves, making them functionally different. Q2: What did Jamie Dimon say about stablecoin regulation? JPMorgan CEO Jamie Dimon warned that if crypto firms pay interest on stablecoins, they should be subject to the same regulations as banks to protect the public from potential systemic risks. Q3: What does the GENIUS Act specifically prohibit? The proposed GENIUS Act explicitly prohibits stablecoin issuers from lending out customer reserve assets or using those reserves as collateral for other transactions, enforcing a 1:1 backing model. Q4: How would a compliant stablecoin differ from a bank account for a user? A user might experience faster, cheaper transactions with a stablecoin but would likely not have FDIC deposit insurance. The stablecoin’s value would rely solely on the quality and custody of its reserves, not a government guarantee. Q5: Why is this regulatory distinction important for the future of finance? Clear rules determine whether stablecoins can scale safely as a new payment infrastructure. Proper classification encourages innovation while managing risks, influencing everything from cross-border payments to the integration of blockchain technology in traditional finance. This post Stablecoins Face Crucial Regulatory Distinction: White House Advisor Rejects Bank Deposit Classification first appeared on BitcoinWorld .

Shiba Inu Tests Rare Price Levels Seen Only Twice in Three Years

Shiba Inu dropped to price lows that have historically served as bottoms, bringing its potential uptrend back into focus. The retest came amid selling pressure and macro uncertainties, weighing heavily on sentiment and prices. Visit Website

EUR/USD Analysis: Sobering Conflict Risks Maintain Downward Pressure on Euro – Commerzbank

BitcoinWorld EUR/USD Analysis: Sobering Conflict Risks Maintain Downward Pressure on Euro – Commerzbank FRANKFURT, March 2025 – The EUR/USD currency pair, the world’s most traded forex instrument, continues to navigate a complex landscape where simmering geopolitical tensions directly translate into market pressure. According to a recent and detailed analysis from Commerzbank, conflict risks remain a primary, sobering factor capping the euro’s potential against a resilient US dollar, shaping trader sentiment and institutional flows as the year progresses. EUR/USD Technical and Fundamental Landscape in 2025 Market participants currently monitor the EUR/USD pair within a defined range, with key psychological levels acting as barriers. The analysis highlights how geopolitical instability injects volatility and typically fosters a ‘flight to safety’. Historically, the US dollar benefits from this dynamic during periods of global uncertainty. Consequently, the euro often faces headwinds not solely from European economic data, but from external conflict zones that influence energy security, trade routes, and broader risk appetite. This environment creates a challenging scenario for the European Central Bank’s policy normalization path. Furthermore, the relative monetary policy stance between the Federal Reserve and the ECB adds another layer. While both central banks may have concluded their most aggressive hiking cycles, the timing and pace of any potential rate cuts become crucial. Persistent conflict risks can lead to divergent inflation pressures, potentially forcing the ECB to maintain a more cautious stance if energy price shocks recur, even as growth slows. This policy divergence, or the market’s perception of it, is a critical transmission channel for geopolitical events into the EUR/USD exchange rate. Geopolitical Flashpoints and Their Direct Forex Impact Commerzbank’s research systematically links specific conflict zones to currency market mechanics. Prolonged instability in Eastern Europe continues to pose a direct threat to European energy infrastructure and supply chains, inherently making the euro area’s economy more vulnerable. Simultaneously, tensions in the Middle East threaten global shipping lanes, potentially spiking energy costs worldwide. However, the United States, as a net energy exporter, possesses a structural buffer that Europe lacks. Energy Security Differential: The US’s energy independence contrasts with the EU’s reliance on imported hydrocarbons, making the euro more sensitive to supply shocks. Safe-Haven Flows: The US dollar’s status as the world’s primary reserve currency attracts capital during crises, strengthening its value. Trade Flow Disruptions: Regional conflicts can disproportionately affect European export markets and import costs, impacting the eurozone’s current account. This asymmetry means that the same geopolitical event often exerts upward pressure on the dollar and downward pressure on the euro, widening the EUR/USD spread. Market sentiment, therefore, remains fragile, with headlines capable of triggering rapid repositioning among hedge funds and algorithmic traders. Commerzbank’s Expert Risk Assessment Framework Commerzbank’s currency strategists employ a multi-factor model to quantify geopolitical risk. This model incorporates not just the probability of escalation, but also the potential channels of economic transmission. For instance, a conflict impacting maritime trade in a key chokepoint carries a different weight and market implication than a localized land dispute. The bank’s analysis suggests that the current risk premium baked into the euro is significant, reflecting a market that prices in a persistent state of elevated tension rather than a single catastrophic event. The table below summarizes the primary transmission channels from conflict to the EUR/USD pair: Transmission Channel Impact on Euro (EUR) Impact on Dollar (USD) Net Effect on EUR/USD Energy Price Shock Negative (Higher import costs, inflation) Neutral/Positive (Exporter benefit) Downward Pressure Safe-Haven Demand Negative (Capital outflow) Positive (Capital inflow) Downward Pressure Growth Expectation Shift Negative (Proximity to conflict) Less Negative (Distance buffer) Downward Pressure Central Bank Policy Divergence Could be Mixed (Hawkish if inflation spikes) Could be Mixed (Hawkish if inflation spikes) Context Dependent Historical Precedents and the Current Cycle Examining past episodes, such as the 2014 Crimea annexation or the initial phases of the 2022 conflict in Ukraine, provides context. In both cases, the EUR/USD pair experienced pronounced sell-offs, driven by the factors outlined above. The current environment is distinct due to its multiplicity of flashpoints and the market’s evolved understanding of long-term structural consequences, like friend-shoring and defense spending increases. Investors now price in a higher baseline level of geopolitical risk, which means the euro may lack the momentum for a sustained rally even during periods of calm, as the underlying tensions remain unresolved. Moreover, the fiscal response in Europe, involving increased defense and energy security budgets, has long-term implications for EU debt dynamics and political cohesion. These factors indirectly influence the euro’s attractiveness as a reserve asset. In contrast, the dollar continues to benefit from its unparalleled liquidity and the depth of US financial markets, which are seen as a port in any storm. Conclusion In conclusion, Commerzbank’s analysis presents a clear thesis: geopolitical conflict risks constitute a persistent and sobering weight on the EUR/USD pair. While domestic economic indicators and central bank communications remain vital, the overarching shadow of instability in key regions ensures a ceiling for the euro’s appreciation against the dollar in the near to medium term. Traders and investors must therefore monitor diplomatic developments and security narratives with the same rigor as economic data releases, as they are inextricably linked in driving the world’s most important currency cross. FAQs Q1: Why does geopolitical risk typically weaken the euro against the dollar? The US dollar is considered the world’s premier safe-haven currency. During times of global uncertainty or conflict, investors seek the stability and liquidity of USD assets, driving demand for the dollar. Europe’s geographic and economic proximity to several conflict zones also makes its economy more directly vulnerable to disruptions. Q2: What specific conflict risks is Commerzbank referring to? While the analysis is broad, the primary risks include ongoing tensions in Eastern Europe, instability in the Middle East affecting energy supplies and shipping, and strategic competition in other regions that could disrupt global trade—all of which disproportionately impact the European economic area. Q3: Can strong European economic data overcome this geopolitical pressure on EUR/USD? Potentially in the short term, but sustained appreciation is difficult. Strong data may provide temporary lifts, but the persistent ‘risk premium’ associated with geopolitical threats often caps rallies, as long-term investors remain cautious about the euro’s exposure. Q4: How does this analysis affect the European Central Bank’s policy decisions? Geopolitical risks complicate the ECB’s mandate. They can cause inflationary supply shocks (arguing for higher rates) while simultaneously dampening economic growth (arguing for lower rates). This policy dilemma can lead to heightened volatility and uncertainty around the ECB’s future actions. Q5: Is the EUR/USD pair only driven by geopolitics? No. Interest rate differentials, relative economic growth (GDP), inflation comparisons (CPI), and trade balance data are all fundamental drivers. However, in the current climate, geopolitics acts as a powerful overlay that amplifies or dampens the market’s reaction to these traditional fundamentals. This post EUR/USD Analysis: Sobering Conflict Risks Maintain Downward Pressure on Euro – Commerzbank first appeared on BitcoinWorld .

Techemynt to Launch Tokenized Gold and Silver Bullion in New Zealand

Cardano Founder Says XRP Qualifies as a Security Under Proposed SEC Standard

Cardano founder Charles Hoskinson has criticized a proposed rule from the U.S. SEC that would automatically classify most tokens, including XRP, as securities unless they meet a strict decentralization standard. Visit Website

KOSPI Crash: Asian Stocks Plunge as South Korea’s Market Suffers Devastating 10% Collapse

BitcoinWorld KOSPI Crash: Asian Stocks Plunge as South Korea’s Market Suffers Devastating 10% Collapse March 12, 2025 – Seoul, South Korea – Asian financial markets entered a period of significant turbulence today as South Korea’s benchmark KOSPI index experienced a dramatic collapse, plummeting over 10% in a single trading session. Consequently, this sharp decline triggered a broader regional sell-off, with major indices across Asia-Pacific markets recording substantial losses. The KOSPI crash represents one of the most severe single-day declines in South Korean market history, raising immediate concerns about financial stability and economic contagion effects. KOSPI Crash Triggers Regional Market Contagion The Korea Composite Stock Price Index opened with notable weakness before accelerating its descent throughout the trading day. Market data from the Korea Exchange confirmed the index closed at 2,215.47 points, representing a staggering 10.3% decline from the previous session. This dramatic movement erased approximately $350 billion in market capitalization from South Korean equities. Meanwhile, Japan’s Nikkei 225 fell 4.7%, while Hong Kong’s Hang Seng Index dropped 5.2%. Similarly, mainland China’s Shanghai Composite declined 3.8%, and Australia’s ASX 200 retreated 3.1%. Financial analysts immediately identified several interconnected factors driving the sell-off. First, renewed concerns about global semiconductor demand significantly impacted South Korea’s technology-heavy index. Second, unexpected monetary policy signals from major central banks created uncertainty about future liquidity conditions. Third, geopolitical tensions in the region contributed to risk aversion among institutional investors. Additionally, automated trading systems likely amplified the downward momentum through algorithmic selling. Asian Stock Market Analysis and Historical Context Today’s market movements represent the most severe single-day decline for the KOSPI since March 2020, during the initial COVID-19 market panic. Historically, the index has experienced only seven previous sessions with losses exceeding 8% since its 1983 inception. The current correction follows a prolonged period of elevated valuations across Asian markets, with price-to-earnings ratios reaching decade highs in late 2024. Regional markets had shown increasing vulnerability to external shocks following months of declining trading volumes and narrowing market breadth. Comparative analysis reveals concerning patterns across Asian exchanges. For instance, Taiwan’s technology-focused market fell 6.1%, while Singapore’s Straits Times Index declined 4.3%. Southeast Asian markets demonstrated slightly more resilience, with Thailand’s SET and Indonesia’s IDX Composite both dropping approximately 3.5%. This tiered response pattern suggests investors are differentiating between markets based on economic fundamentals and sector exposures. March 12, 2025 Asian Market Performance Market Index Daily Change Year-to-Date South Korea KOSPI -10.3% -18.2% Japan Nikkei 225 -4.7% -9.4% Hong Kong Hang Seng -5.2% -12.1% China Shanghai Composite -3.8% -7.3% Australia ASX 200 -3.1% -5.6% Expert Analysis of Market Fundamentals Financial institutions have begun assessing the underlying causes of today’s dramatic movements. Goldman Sachs Asia-Pacific research indicates that semiconductor sector concerns account for approximately 40% of the KOSPI’s decline, given the index’s heavy weighting toward technology companies like Samsung Electronics and SK Hynix. Morgan Stanley analysts note that foreign investor outflows from South Korean equities reached $4.2 billion today, the largest single-day withdrawal since 2008. Meanwhile, the Bank of Korea has monitored currency markets closely as the won depreciated 2.1% against the U.S. dollar. Market technicians highlight several critical technical levels breached during the session. The KOSPI fell through its 200-week moving average for the first time since 2020, a significant long-term support level. Trading volume reached 1.8 billion shares, nearly triple the 30-day average, indicating panic selling rather than orderly profit-taking. Options market data shows put option volume surged to record levels, with the volatility index (VKOSPI) spiking to 58.7, its highest reading since the 2008 financial crisis. Economic Impact and Sector-Specific Consequences The market collapse carries substantial implications for South Korea’s economy and corporate sector. Major conglomerates experienced devastating losses in market value. Samsung Electronics shares plunged 12.4%, while Hyundai Motor dropped 14.2%. SK Hynix fell 15.7% amid concerns about memory chip pricing. Financial institutions also suffered, with KB Financial Group declining 11.3% and Shinhan Financial Group falling 10.8%. Retail investors, who comprise approximately 25% of South Korean market participation, faced particularly severe losses given their higher exposure to small-cap stocks. The economic consequences extend beyond equity markets. Corporate bond spreads widened significantly as credit risk perceptions increased. The yield on South Korea’s 10-year government bond rose 25 basis points to 3.85%, reflecting heightened risk aversion. Currency markets experienced substantial volatility, with the Korean won reaching its weakest level against the dollar since November 2023. This currency movement may complicate the Bank of Korea’s monetary policy decisions, potentially limiting its ability to provide stimulus. Key sectors experiencing the most severe impacts include: Technology and Semiconductors: Global demand concerns and inventory adjustments Automotive: Electric vehicle competition and supply chain disruptions Financial Services: Rising credit risk and margin pressure Construction and Real Estate: High interest rate sensitivity Consumer Discretionary: Reduced household wealth effects Regulatory Response and Market Stabilization Measures South Korean financial authorities have initiated several measures to address market instability. The Financial Services Commission announced a temporary ban on short selling for all KOSPI and KOSDAQ stocks, effective immediately. Additionally, the Korea Exchange activated sidecar circuit breakers twice during the session, temporarily halting program trading after declines exceeded 8% and 10%. The Bank of Korea indicated readiness to provide liquidity support through repo operations if necessary, while emphasizing its commitment to financial system stability. International regulatory coordination has also intensified. The Financial Stability Board convened an emergency meeting of Asian regulators to discuss cross-border implications. The International Monetary Fund released a statement acknowledging the market stress while expressing confidence in South Korea’s strong economic fundamentals and substantial foreign exchange reserves. Regional central banks, including the Bank of Japan and People’s Bank of China, have established enhanced communication channels to prevent disorderly currency movements. Historical Parallels and Recovery Scenarios Financial historians note several historical parallels to today’s events. The 1997 Asian Financial Crisis began with currency pressures before affecting equity markets. The 2008 Global Financial Crisis saw coordinated central bank interventions. The 2020 COVID-19 crash prompted unprecedented fiscal and monetary responses. Current conditions differ in that they originate from sector-specific concerns rather than systemic banking issues or pandemic disruptions. Market recovery scenarios depend on several factors. A stabilization in semiconductor demand could provide the foundation for technology sector recovery. Coordinated central bank communication might reduce policy uncertainty. Geopolitical de-escalation could improve regional risk sentiment. Historical analysis suggests that markets typically require 3-6 months to establish a sustainable recovery following declines of this magnitude, though much depends on subsequent economic data and policy responses. Conclusion The KOSPI crash and resulting Asian stock market decline represent a significant financial event with broad implications. South Korea’s 10% market collapse has triggered regional contagion, affecting investor confidence and economic outlooks across Asia-Pacific markets. While the immediate causes involve sector-specific concerns and policy uncertainty, the broader context includes elevated valuations and changing global economic conditions. Market participants will closely monitor regulatory responses, corporate earnings revisions, and macroeconomic indicators in coming weeks. The KOSPI’s dramatic movement serves as a powerful reminder of financial market interconnectedness and the importance of robust risk management frameworks in volatile conditions. FAQs Q1: What caused the KOSPI to fall over 10% in a single day? The decline resulted from multiple factors including semiconductor demand concerns, monetary policy uncertainty, geopolitical tensions, and amplified selling through automated trading systems. Foreign investor withdrawals exceeding $4 billion further accelerated the downward momentum. Q2: How does this KOSPI crash compare to historical market declines? This represents the largest single-day percentage decline since March 2020. Historically, only seven previous sessions have seen losses exceeding 8% since the KOSPI’s 1983 inception, making this one of the most severe corrections in South Korean market history. Q3: Which sectors were most affected by the market collapse? Technology and semiconductor companies experienced the most severe declines due to global demand concerns. Automotive, financial services, construction, and consumer discretionary sectors also suffered substantial losses exceeding the broader market average. Q4: What measures have South Korean authorities implemented to stabilize markets? Regulators have banned short selling, activated circuit breakers, and indicated readiness to provide liquidity support. The Korea Exchange halted program trading multiple times during the session to reduce volatility. Q5: Could this KOSPI crash trigger a broader Asian financial crisis? While concerning, most analysts believe strong fundamentals, substantial foreign reserves, and improved regulatory frameworks since 1997 reduce systemic risk. However, continued stress could affect regional growth projections and investment flows in coming quarters. This post KOSPI Crash: Asian Stocks Plunge as South Korea’s Market Suffers Devastating 10% Collapse first appeared on BitcoinWorld .

LBank Labs Drives Precious Metals Futures Past $6 Billion in Trading Volume

LBank’s Precious Metals Futures division surpassed $6 billion in trading volume and drew 20,000 users. Tokenized metals like GOLD, SILVER, and XAUT dominated platform activity, with open interest surging. Continue Reading: LBank Labs Drives Precious Metals Futures Past $6 Billion in Trading Volume The post LBank Labs Drives Precious Metals Futures Past $6 Billion in Trading Volume appeared first on COINTURK NEWS .

Why Has Bitcoin Dumped 50% When Global Liquidity Has Increased?

Bitcoin’s 50% decline from all-time highs in just four months comes at a time when global liquidity has increased, which counters the common premise that the price follows liquidity. “The divergence is striking, and it demands explanation,” said Chris Tipper, chief economist and strategist at the Ainslie Group. Global liquidity has climbed around $5 trillion since Bitcoin’s peak in October and is now almost $190 trillion, according to Ainslie Wealth. However, this is being driven by the People’s Bank of China, which added $1 trillion in 2025 and likely another trillion this year, said Tipper. Chinese Favor Gold Over Bitcoin Chinese liquidity doesn’t flow into Bitcoin (which is banned), it flows into gold reserves, domestic infrastructure, and the real economy, he added. “So when you strip out the Chinese contribution and look only at the Western liquidity that Bitcoin actually responds to, momentum peaked in October and has been decelerating since.” Gold markets reacted to this and reached all-time highs in late January, with the precious metal trading just 5% down from that peak today. Bitcoin responded to the Western component and corrected. “Two assets, same headline liquidity number, opposite performance, entirely explained by the bifurcation.” The economist concluded that when Western liquidity momentum re-accelerates, whether from a Federal Reserve response to market stress, dollar weakness, or a “disorderly event that forces intervention,” Bitcoin has significant ground to recover. The US Dollar Index (DXY), as a “rough proxy for Western liquidity, seems to support your argument,” commented Abra CEO and Algorand chairman, Bill Barhydt. The DXY has recovered in recent days following the escalation of military strikes in Iran. From a low of 97.5 in late February, it climbed to 99.6 on Tuesday as the dollar strengthened, according to TradingView. A stronger dollar is also bad news for Bitcoin markets. BTC Price Outlook At the same time, Bitcoin tanked below $67,000 again in late trading on Tuesday but managed to recover to $68,500 by Wednesday morning in Asia. The asset has seen heavy resistance at $70,000 and is unlikely to break above it until Western liquidity improves through Fed rate cuts or more money printing. The post Why Has Bitcoin Dumped 50% When Global Liquidity Has Increased? appeared first on CryptoPotato .

Bitcoin rejected at $70K again, but a short squeeze may still be brewing!

The 7-day moving average of the taker buy/sell ratio rose above 1 over the past week.

Another Bitcoin Miner Shifts To AI: Core Scientific Offloads 1,900 BTC

Core Scientific is the latest in the line of Bitcoin miners accelerating a pivot toward AI, selling 1,900 BTC and signaling that more is coming. Core Scientific Expects To Sell All Of Its Bitcoin Holdings In Q1 2026 Core Scientific has filed its annual report with the US Securities and Exchange Commission (SEC) and it reveals key insights about the direction that the company is taking right now. Originally a Bitcoin mining-focused firm, Core Scientific is among the largest public miners in the world, but recently, the firm has been making a push into the AI compute business. At the end of 2024, the company had a total computing power or “ Hashrate ” amounting to 20.1 exahashes per second (EH/s). The 2025 annual report suggests that this metric has dropped to 17.9 EH/s as the AI expansion has occurred. Not just that, the report also noted that Core Scientific expects to monetize substantially all of its Bitcoin holdings during 2026, with the majority of sales occurring within the first quarter. This selling has already begun, as the firm announced in its Q4 2025 earnings call that it sold over 1,900 BTC for $175 million in January. Before the sale, the firm held 2,537 BTC, but now, that figure has dropped to just 630 BTC. Considering the SEC filing, Core Scientific plans to eventually part with these remaining tokens as well. So, where are the funds from the BTC sales going? Not mining, it seems. The company noted in the filing: Aside from the miners received in 2025 and those expected from Block, we do not anticipate entering into new large-scale bitcoin mining equipment procurement agreements as we continue to shift capital allocation toward HDC infrastructure While Core Scientific has pulled back on its Hashrate over the course of 2025, the firm remains among the top 10 public BTC miners, according to data from BitcoinMiningStock . With expansions stopping in favor of the AI pivot, though, it only remains to be seen how long the company will maintain relevance as a miner. A push into the High-Performance Computing (HPC) business is actually something that’s being witnessed across the Bitcoin mining industry at the moment. Bitdeer, Cango, and Bitfarms, placed first, fifth, and tenth on the top 10 list, respectively, are all making a pivot to datacenters. Bitfarms, in particular, plans to wind down its mining facilities over the course of 2026 and 2027, signaling a complete exit from the space. Ben Gagnon, the firm’s CEO, believes the pivot to be highly lucrative, explaining: Despite being less than 1% of our total developable portfolio, we believe that the conversion of just our Washington site to GPU-as-a-Service could potentially produce more net operating income than we have ever generated with Bitcoin mining. BTC Price At the time of writing, Bitcoin is trading around $68,200, up more than 6% over the past week.