Cryptocurrency markets have remained resilient despite stocks' weakness over the past week and increased regulatory activity in the U.S., Citi said in a research report Friday.
“Correlations with equities have continued to decline from last year’s peaks,” analysts led by Alex Saunders wrote. “Volumes remain robust, although on-chain and search activity have not been as durable.”
Stablecoin market caps have become steady after they declined following the collapse of crypto exchange FTX, while the percentage of ether (ETH) in smart contracts continues to rise, the report said. A stablecoin is a type of cryptocurrency whose value is pegged to another asset, such as the U.S. dollar or gold.
Following the U.S. Securities and Exchange Commission's plan to sue Paxos, the issuer of stablecoin binance USD (BUSD), there have been more than $3.5 billion in BUSD outflows, representing a 23% fall in market capitalization, Citi noted. The outflows have generally made their way into rival stablecoin tether (USDT), the bank said.
“Total-value-locked (TVL) activity in ETH terms has not picked up as much as prices,” the note said, and decentralized exchange (DEX) volumes are unchanged this month after a steady decline.
The bank notes that non-fungible-token (NFT) activity has increased in recent weeks, though transactions levels remain far below 2022 averages.
Crypto search interest remains low despite the year-to-date rally in digital assets, the note added.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.