As the book closes on February, we can only reflect on it as a comedown from the exhilarating January that kickstarted 2023. Overall, crypto prices decreased in February, but perhaps surprising to many, most gains made in January’s boom held throughout the month and into March.
The decline is not surprising, coinciding with concerning inflation and employment data. This began with a higher-than-expected Consumer Price Index (CPI) in the first half of the month. The unexpected rise in inflation caused fear that interest rates would soar, which generally means bad news for high risk assets such as volatile stocks and cryptocurrencies.
The worry continued with persistent jobless claims (a metric tracking people in the US filing for unemployment). Additionally, regulatory actions against cryptocurrency in the U.S. raised concerns about the future of digital assets in the world’s leading economy. However, through the FUD, most cryptocurrency assets remained resilient.
According to CoinDesk data, Bitcoin (BTC) was trading flat at around $23,080 at the end of February, significantly lower than its mid-February highs above the $25,000 mark. Ether traded sideways for the month, hovering just above $1,600.
No doubt, the biggest winner this month was the native STX token of Bitcoin layer 2 protocol Stacks Network. It had the biggest gain in February among 160 assets in the CoinDesk Market Index, rising by 230%. This surge in price coincided with growing interest in creating Ordinal NFTs on Bitcoin's mainnet.
On the other hand, in February, gaming and Metaverse tokens that performed well in January experienced a significant drop, with GMT, GALA, and APT tokens falling by 33%, 28%, and nearly 30%, respectively. Altcoin cycles are typically short-lived, but recent market behavior may be due to a lack of new capital inflows and poor liquidity, leading to erratic patterns. With February fresh in our minds, let us look at all the news in the crypto-sphere today.
1 - Investors withdrew over $6 billion from a Binance-branded digital token, BUSD, last month. This is due to a recent US regulatory crackdown on digital assets. New York's financial regulator stopped the new issuance of BUSD last month, citing several unresolved issues relating to Binance's relationship with Paxos.
The outflows may hurt Binance's bottom line, as BUSD represents a significant part of its business. US authorities are stepping up their scrutiny of the crypto industry, with stablecoins being among their targets. Binance has stated that it intends to support as many other stablecoins as possible.
2 - Coinbase has launched a grassroots campaign to promote pro-crypto policies in the United States, according to a series of tweets posted on February 28th. The #Crypto435 campaign aims to engage the crypto advocacy community and provide resources to help them make their voices heard in all 435 congressional districts.
Coinbase has asked interested parties to sign up to receive information on how to contact their local politicians, their crypto policy records, and advice on how to make their opinions heard. The company argues that political action is now necessary as decisions made by legislators and regulators in the United States will impact the future of crypto.
While the announcement received some praise, some Twitter users criticized the move as hypocritical. They cited Coinbase's delisting of XRP following the SEC’s classification of security.
3 - According to Cointelegraph, the number of layoffs in the crypto industry significantly decreased in February. An estimated 570 crypto employees were let go, compared to 2,850 in January. The cuts were mostly double-digit and spread across at least 12 companies.
Firms that announced headcount reductions include Dapper Labs, Polygon Labs, Bittrex, Magic Eden, Fireblocks, Protocol Labs, and The Block. Despite the slowdown, crypto recruitment experts warn that the SEC could still bring more pain, and the negative press surrounding FTX and Sam Bankman-Fried is affecting mainstream adoption.
4 - DWF Labs, a digital asset market maker, and investment firm has invested $10 million in Conflux, a China-based blockchain platform. Conflux recently signed a deal with China Telecom to build blockchain-based SIM cards. It is the only crypto company with government approval to operate in China after the 2021 ban on all crypto products. DWF Labs bought tokens of Conflux, citing the potential for Conflux's technology to revolutionize blockchain-enabled products and services.