- Bitcoin value cautiously climbs to $26.8K, but market analysts hint at vulnerability amid uncertain industry and economic factors.
- Crypto.com among the exchanges featuring internal market makers, raising questions of conflict of interest and stirring concerns in the cryptosphere.
Bitcoin, the dominant player in the cryptocurrency market, recently witnessed a minor upsurge, hitting the $26.8K mark as the Asian markets opened. Yet, market watchers like Craig Erlam, Oanda’s Senior Market Analyst, cast doubt over any significant leap in Bitcoin’s price in the foreseeable future due to volatile industry and economic indicators.
One of the focal issues stirring debate in the crypto industry is the role of market makers within crypto exchanges. The Financial Times recently scrutinized the operations of Crypto.com’s internal market maker, sparking fresh discussions on potential conflicts of interest.
As the trading day in Asia commenced, both Bitcoin and Ether started on an optimistic note, with Bitcoin rising 1.7% to $26,816 and Ether increasing 0.7% to $1,736. The market is looking forward to BlackRock’s prospective success with its application for a Bitcoin spot exchange-traded fund, but Bitcoin’s vulnerability persists, according to Erlam.
He pointed out that despite ending the last week on a positive trajectory following a slump to three-month lows, Bitcoin appears susceptible to further drops. Erlam cites the unfavorable two-month trend and current news flow as contributing factors, although he insists it’s not a dire situation given the 50% increase in Bitcoin’s value over the past year.
Contrary to the prevailing concerns, Erlam perceives the recent market downturns as a correction phase within a broadly hopeful bull market. However, he also admits the lack of clear evidence pointing towards an imminent uptick, especially in light of the US Securities and Exchange Commission’s ramped-up scrutiny of key exchanges.
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The controversy around market makers in crypto exchanges has come under the spotlight recently. Market makers are entities that leverage their capital to facilitate token trades on exchanges, effectively taking the counter position on a trade. This role is crucial for ensuring investors can quickly exit positions without needing a counterparty at the other end, thus maintaining liquidity.
Crypto.com, for instance, confirmed operating an internal market maker treated the same as third-party market makers, aiming to ensure tight spreads and efficient markets. While the practice isn’t controversial in itself, the potential for conflict of interest arises when these market makers also invest in the tokens they trade.
Automated market makers in the Decentralized Finance (DeFi) realm, such as Uniswap, might present a fairer option as they operate algorithmically and are open-source. Despite this, even they aren’t immune to accusations of bias. Regardless, the current system, albeit not ideal, appears to be an industry norm, with crypto exchanges like Crypto.com maintaining their stance on the necessity of their operations.
The complex dynamics of the crypto world continue to evolve, driven by market trends, economic factors, and regulatory shifts, leaving investors and enthusiasts to watch with bated breath.
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