Despite a chaotic weekend, Bitcoin and the broader crypto market recovered strongly on Sunday afternoon (EST). Another key bank partner has left the crypto ecosystem.
The good news is that Silicon Valley Bank’s (SIVB) customer funds are being rescued, which means Circle, the issuer of USDC stablecoin, also receives all of its funds. Meanwhile, the Federal Reserve (Fed) and the Treasury Department in the US are shutting down the crypto bank Signature Bank (SBNY), which is also reportedly in danger of collapsing.
Ultimately, this is a loss for the industry. It has taken less than a week for the crypto sector’s key banking partners to be eliminated. Given the intense scrutiny they will face, it is difficult to imagine other US banks feeling comfortable servicing this industry in the future.
Among these developments, Binance CEO Changpeng Zhao recently announced on Twitter that his crypto exchange will convert the remaining $1 billion in Industry Recovery Initiative Fund from BUSD to Bitcoin, Ethereum, and Binance Coin (BNB).
Incoming Massive Buying Pressure on Bitcoin, ETH, and BNB
Binance established the Industry Recovery Fund following the demise of FTX in November 2022. The fund was created to assist cryptocurrency projects that were experiencing a liquidity crisis as a result of the FTX crash.
The fund still contains $1 billion in Binance USD Coin (BUSD). Changpeng Zhao, the exchange’s CEO, made an unexpected announcement today, stating that these funds will be converted into Bitcoin, Ethereum (ETH), and Binance Coin.
Immediately following the announcement, all $1 trillion BUSD of the industry recovery effort fund was moved to Binance, according to on-chain data source Lookonchain.
The impact of Binance’s acquisition is only speculative. Analyst Miles Deutscher agreed that Binance will not simply “buy $1 billion in the market” to significantly influence the price. Binance has top-tier market makers and a highly liquid exchange.
Deutscher acknowledged that “the actual purchase may not have the impact some expect,” and that “much of the price shift will be people front running,” but he also stressed the enormity of the influence that buy orders of CZ can have:
“Consider the impact Do Kwon’s LFG Bitcoin acquisitions had on the price at the time. Whatever the case, it mostly serves to alter the mood. There’s a chance that people will take the lead”.
At press time, the Bitcoin price was $22,456, up nearly 10% in the previous 24 hours.