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The cryptocurrency market has been experiencing a drawdown for the past month, which intensified in the past 24 hours with the fear of the bankrupt crypto exchange FTX dumping billions of dollars worth of crypto assets in the coming days.
The fear led investors to panic sell, sending the crypto market cap plummeting below the $1 trillion mark as nearly $29 billion was wiped out. By Monday, this decline had brought the crypto market to a six-month low, falling to a level of $987 billion—last seen in March of this year.
This downturn did not come as a complete surprise, as investor sentiment was already fragile. The crypto fear and greed index had been hovering at a cautious 40 out of 100 since mid-August. The FUD (fear, uncertainty, and doubt) triggered by news of the FTX bankruptcy hearing further rattled the market, sending the index reading plummeting to 30 out of 100.
During this time, besides traders and investors, many large trading firms also jumped onto offloading their millions of dollars worth of crypto assets. These firms included Jump Trading, Abraxas Capital Management, and Wintermute Trading, as they deposited more than $30 million worth of BTC, ETH, and ARB on various exchanges, according to analysis firms Arkham Intelligence and Lookonchain.
Data reveals that asset manager Abraxas Capital transferred 14,130 ETH to Bitfinex, market maker Jump Trading sent nearly 236 BTC to Binance, and yet another market maker, Wintermute, deposited more than $3.3 million in ARB to Binance.
Adding to the Downward Pressure
Big transfers and investor sentiments worsened as crypto markets turned down sharply on concerns about FTX potentially shedding its $3.4 billion digital asset stash, adding worries to the already historically turbulent month in which BTC has been scoring negative returns every year since 2016.
Matrixport, a Singapore-based crypto services provider, noted in a Monday market report that “an altcoin crash is coming,” with FTX expected to start selling tokens as early as this week. The firm said this could weigh on altcoin prices for the rest of the year.
SOL is facing the most significant pressure among all altcoins because FTX holds $1.16 billion worth of that token, which is nearly 16% of its outstanding supply. Layer 1 Solana's SOL slumped to just under $17.50, layer 2 Arbitrum's ARB tumbled under $0.750, and FTX's native token FTT plunged to $0.967 during the Monday sell-off.
According to a Monday court filing, the estate of the bankrupt exchange has around $7 billion in assets, including $560 million in Bitcoin and hundreds of millions in lesser-known illiquid micro-cap tokens such as MAPS and Serum (SRM).
The now-defunct exchange has asked a New York judge for permission to start selling off its crypto holdings to return funds to creditors in cash.
And for that, FTX has already tapped Mike Novogratz's digital asset investment firm, Galaxy, to assist with the sales. Meanwhile, FTX founder Sam Bankman-Fried, who has pleaded not guilty to multiple fraud charges, has a trial due to start next month.
The Trend Remains Bearish
All of this added to the bearish impact experienced by the market and sent Bitcoin price under $25K. The largest cryptocurrency by market cap briefly dipped to as low as $24,963 for the first time since mid-June. Ether, the second largest crypto asset by market capitalization, also fell to $1,540.
As per Matrixport, ETH could drop further as the protocol's “revenue growth disappoints,” and a decline below $1,500 can bring back the possibility of a drop to $1,000. “We could even envision a scenario where prices materially drop lower into year-end,” said Matrixport.
All this sell-off resulted in the largest long liquidations in three weeks, with close to $150 million worth of longs being liquidated. In the past 24 hours, 49,239 traders were liquidated, and the total liquidations came in at $184.32 million, according to data from Coinglass.
However, crypto prices have pared all those losses, with Bitcoin now trading at around $26,130 and Ether exchanging hands at $1,607 while the total crypto market cap is back at $1.07 trillion.
The latest move is the result of a short squeeze. As shorts rushed in to close their bearish bets, it caused the cumulative open interest (which is the dollar value locked in open positions) in futures and perpetual swaps trading on Binance, OKX, Bybit, and Deribit to fall from $5.05 billion to $4.8 billion.
Despite the upward move, the market remains weak, with no immediate bullish catalysts present for the price. The bitcoin spot ETF optimism has already faded, and halving isn't coming until April 2024. Currently, all the focus has shifted to the impending liquidation of FTX's altcoin holdings.
According to Markus Thielen, Matrixport's head of research and strategy, for Bitcoin, the price being below the 50-day moving average of $27,731 is bearish. Similarly, Ethereum's price is also below the 50 DMA of $1,752, which is again bearish.
As for altcoins, those “of the previous bull markets appear tainted due to poor tokenomics and might never come back while we need a new theme for the next generation of altcoins to gain traction,” Thielen said in a LinkedIn post. “In the meantime, keeping exposure to bitcoin makes the most sense.”
TWT Token Rejoicing in Green
As the crypto market plunged, so did Trust Wallet Token (TWT). The crypto asset fell as low as $0.721 on Monday before it jumped 13.8% to as high as $0.82147 today. Since then, the price has lost some of these gains as it now trades at $0.792, up 7.8% against USD, 5.7% against BTC, and 5.5% against ETH in the past 24 hours. During this time, the altcoin recorded $79.6 million in trading volume, representing an increase of 495.70% from a day ago.
Despite these gains, TWT's value is down by 0.9% in the past week and also % in the red by 12% in the last 30 days. The token is actually down about 45% in 2023 so far. This year has been a brutal one for TWT, which has been on a downtrend throughout 2023.
Before starting 2023, TWT's price jumped from about $1 on the 10th of November to $2.72 on the 11th of December, hitting its all-time high (ATH). After recording over 170% gains within a month, TWT went down to about $1.25 at the end of the year. While the price of TWT went up in the first month of the year to as high as about $1.80, it has only been going down since then.
With that, the coin has lost 22% of its value over the past year and 70.9% since hitting its ATH. Meanwhile, the lowest TWT ever went was in June 2020 at $0.0027764, just a few months after the token first entered the open market. The token has a total supply of 1 billion, out of which less than half, 416.4 million TWT tokens are currently circulating in the market.
As the name suggests, TWT is the native token of the Trust Wallet. Co-founded by Viktor Radchenko and Maxim Rasputin in late 2017, Trust Wallet was acquired by the largest cryptocurrency exchange, Binance, in July 2018 and is the official crypto wallet of BSC Chain. The platform's links to Binance saw the TWT token drop hard in June to $0.733 following the news that the US Securities and Exchange Commission (SEC) was to sue the exchange.
Trust Wallet is a crypto wallet that allows users to send, receive, and store digital assets and collect NFTs. Trust Wallet is not only integrated with multiple blockchain networks, including Ethereum, Bitcoin, Litecoin, and Binance, but also other DEXs such as Pancake Swap, Uniswap, or Binance DEX so that users can buy, hold, and exchange their cryptos using a single interface.
The mobile app has fiat onboarding, allowing users to purchase crypto with credit cards. It aims to make it easier for users to access crypto services like dApps.
Furthermore, Trust Wallet offers staking options to the users as an alternative source of income as well as allowing them to participate in respective network security. To earn rewards, users can stake different crypto assets such as BNB, ETH, TRX, XTZ, and ATOM.
Meanwhile, as both a utility and governance token, the wallet uses its native TWT token to incentivize the users and gives the holders the right to vote on important decisions like new tokens, features, and support for the network. The token is also used to collect user transaction fees for activities like payments and accessing various dApps.
Currently, the platform is holding a $50,000 giveaway in partnership with crypto analysis firm Arkham. The promotion will be running until the 14th of September, 2023, at 13:00 (UTC).
Being a non-custodial app and browser extension, Trust Wallet allows users to own their own private keys.
Over time, Trust Wallet has grown to become one of the most downloaded crypto apps. On Google Play, it has more than 10 million downloads, while its Chrome browser extension shows 500,000+ users. More than 60 million people use the wallet, and it supports over 70 blockchain standards.
Trust Wallet Developments
While price-wise, the crypto market is having a harsh time, Trust Wallet did not let it deter it from its focus on developing and expanding its ecosystem. Last month, the crypto wallet made several updates on both its mobile app and browser extension.
The wallet added support for seven new blockchains, viz. Coinbase's Base, Sei Network, Conflux Network, Klaytn, Moonbeam Network, Moonriver Network, and Kusama Network provide its users with a wider range of crypto to manage & dApps to explore. Meanwhile, for NFT support, it now supports five new NFT chains on mobile, including Polygon, Zksync, Celo, Moonbeam Network, and Moonriver Network.
When it comes to staking options, the wallet added Injective, Stargaze, and Cronos to its mobile app, while the browser extension saw staking support for BNB Chain, Cosmos, Kava, Terra, Osmosis, Cronos, Injective, Stargaze, Stride, and Evmos. Additionally, Trust Wallet also added ERC20 stablecoin support for THORChain and Rune swaps through Thorchain integration.
Amidst all this, Trust Wallet CEO Eowyn Chen talked about the platform aiming to bank the unbanked population of Africa, where it has been growing its presence by introducing blockchain education programs and fiat to crypto on-ramp service.
In a recent interview, Chen talked about the wallets' ability to bypass centralized institutions, offering a unique advantage that connects more Africans to the global financial markets. “(Financial inclusion) is the vision we all in this space want,” said Chen, a former Binance marketing chief, who replaced co-founder Radchenko as CEO in March 2022 after he stepped down due to family reasons. “That's why we talk about being your own bank, practicing self-custody, and accessing a financial infrastructure that wouldn't get abused by a centralized entity.”
While speculation remains the main driver for users in Africa, much like most crypto users, Chen says, “Eventually, you level up. You move from just getting financial gains through speculative trading to wanting to really understand the intrinsic value of tokens. That's when you begin to trust yourself to hold assets through a self-custody app like Trust Wallet.”
According to Chen, making real estate more liquid in Africa by tokenizing huge properties worldwide is “a big play for blockchain utility in Africa, added to the utility of cross-border payments.”
Cryptocurrency prices have recovered since the drop in prices on Monday, but as Thielen of Matrixport noted, “Overall, the trend is down, which indicates a bearish sentiment.” Not to mention, historically bearish September doesn't paint an optimistic picture for crypto prices.
This means TWT, much like the broad crypto market, will continue its downward journey regardless of the small bouts of volatility it experiences from time to time. However, given that Trust Wallet is a popular, free-to-use digital wallet to store and manage crypto for millions of users, the growing adoption of the wallet will translate into a positive price action for its token when the market trend changes.
Gaurav started trading cryptocurrencies in 2017 and has fallen in love with the crypto space ever since. His interest in everything crypto turned him into a writer specializing in cryptocurrencies and blockchain. Soon he found himself working with crypto companies and media outlets. He is also a big-time Batman fan.