Markets
Wall Street returned to T+1 trading for the first time in a century. How long until T+0?
A few days after the US securities settlement cycle returned to T+1– meaning “trading day plus one business day” – SEC Chairman Gary Gensler called the “historic” conversion, stating that the transition has gone “smoothly so far.” The move, he added, “will benefit investors and eliminate risks from the system.”
Moving from T+2 is “win-win” for hedge funds and broker-dealers, Lawrence White, an economics professor at NYU Stern School of Business, told Fortune. But for retail investors outside Wall Street’s elite, the change amounts to “small potatoes.”
“This is not a big deal, nor a major event – most won’t even notice,” he added.
But what would happen if the passage was on T+0 instead? While perhaps “small potatoes” to some, many in the cryptocurrency world see the T+1 move as symbolic: a step toward deals happening on the same day as trades, as, for example, on a blockchain.
Replying to Gensler X post announcing the change, Ryan Selkis, founder and CEO of Messari, he wrote: “Almost as good as cryptocurrency @garygensler. We should give you a demo soon.”
Almost as much as cryptocurrencies @garygensler.
We should give you a demo soon.
— Ryan Selkis (d/acc) 🇺🇸 (@twobitidiot) May 28, 2024
Another user X, a Coinbase ambassador, added: “If only there was a technology capable of stabilizing instantly…”. Yet another pointed out that Solana settles in 0.8 seconds.
Robert Le, a crypto analyst at PitchBook, told Fortune that he has observed frustration from traders rotating between traditional stock markets and cryptocurrency markets due to different settlement cycles. “I definitely think so [crypto] inspired him,” he says, referring to the SEC chairman.
And the transition to T+0 is not excluded, at least for now. “Distributed Ledger Technology,” SEC Commissioner Caroline Crenshare he wrote“…in the near future it could be both desirable and feasible.”
The plumbing of Wall Street
But to evaluate the case for T+0, it’s worth considering what settlement cycles are and why they exist in the first place. Often considered the “plumbing” of the markets – a kind of behind-the-scenes bureaucracy – a delay between trades and transactions allows sellers to deliver their securities certificates to broker-dealers (or they do so on behalf of the sellers) and buyers of deposit funds.
T+1 is technically a homecoming for Wall Street. During the 1920s, a decade characterized by mass wealth creation and soaring stock market performance, the New York Stock Exchange traded at T+1. But it was forcibly extended to T+5, as the growing number of trades exceeded the time needed to exchange documents: back then, stock and bond trading involved physical certificates. But with the advent of the Internet, it jumped to T+3 in 1995 and then to T+2 in 2017.
So what prompted the return to T+1? She told her that “the biggest factor” may have been recent meme frenzy.
At the beginning of 2021, a retail trader known as “Roaring Kitty” they took to social media to coordinate a (legal) attack on Wall Street. Amateur traders were asked to buy cheap shares in troubled companies such as GameStop, AMC and Bed Bath & Beyond, primarily through the online brokerage platform Robinhood. The goal was to leverage these actions against the short positions held by hedge funds. At the end of 2020, GameStop was trading for around $5. At the end of January 2021, it closed above $80 after hitting an intraday high of over $120.
Intermediaries are expected to meet liquidity for operations (also known as “post collateral”) during settlement periods. Brokers like Robinhood are required to provide collateral through a company called the Depository Trust & Clearing Corporation, or DTCC, which provides settlement services to market participants. But the sudden influx of billions of dollars in trades overwhelmed Robinhood’s reserves – the DTCC failed to liquidate them immediately – and Robinhood was forced to stop trading those shares.
“And, of course,” Lee says, “there was a huge uproar.”
Oh! What a crazy way to start the day.@RobinhoodApp and other platforms stop purchases $GME & $AMC + shares blocked with share volume of 116,825,527 $AMC Alone. This will be one for the history books. pic.twitter.com/BvGYQ9OJsi
— Mark Blackwell (@blackwellmark) January 28, 2021
In announcing the move to T+1, the SEC concluded that a shorter window reduces the likelihood that the buyer or seller will default before a transaction is completed. For brokers, this means lower margin requirements and less risk of high volumes forcing trades to a screeching halt.
Avoid “a mess”
For White, although there are compelling reasons to return to T+1, dropping to T+0 could introduce additional risks that would offset any gains. He uses the analogy of buying a product from a store (a T+0 transaction): what happens if, once home, the buyer notices that his purchase is damaged, or what happens if the seller realizes that the dollar bill is counterfeit?
“There can still be – to use a technical term in economics – an error,” he says. Regardless of how advanced new technology may be, same-day settlements won’t necessarily prevent errors or fraud. T+1 means giving the markets “some time to make sure everything is in order”.
Given that the global foreign exchange market still takes two business days to settle, the move to T+1 already puts it out of alignment with US markets. Foreign traders now face the challenge of ensuring they have funds in time to settle transactions. The move to T+1 potentially puts at risk around $70 billion of forex trades each day, equivalent to 40% of daily flows.second the European Fund and Asset Management Association.
These may be relatively smaller shares to most retail investors, but they don’t seem like smaller shares to them. In 2017, daily peak retail flows reached $640 million, a figure that more than doubled to $1.5 billion from last year, according to data from Vanda Research.
As more and more retail investors enter the world of trading, the case for T+0 is likely to be stronger, as more and more investors demand faster access to money.
“Sometimes retail investors need that money right away,” Le says. “Maybe they are selling to cover the rent.”
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Fuente
Bitcoin AND Etherealalong with the rest of the top 10 cryptocurrencies by market cap, appear to be in hibernation on Thursday morning.
At the time of writing, the Bitcoin Price is still below $65,000 and 2.2% lower than it was this time yesterday, according to CoinGecko data. Things are worse for the Ethereum Pricewhich is 3.7% lower than 24 hours ago at $3,185.22. The drop in ETH’s price is identical to that of Lido Staked Ethereum (stETH), a liquid staking token for Ethereum.
In recent days, falling prices have led to the liquidation of derivative contracts worth $225 million, according to Coin glassAnd about half of that, about $100 million, was liquidated in the last 12 hours.
When a trader is liquidated, it means that their position in the market has been forcibly closed by an exchange or brokerage due to a margin call or insufficient collateral. Margin is especially important when it comes to leveraged positions, which allow traders to control a multiple of their deposit, such as opening a $10,000 position with only $1,000 in their account.
Now that Bitcoin has been in the red for three days in a row, there is a chance that the world’s oldest and largest cryptocurrency could sink even further, BRN analyst Valentin Fournier said in a note shared with Decrypt.
“Bitcoin has closed in the red for three days in a row, with one-way trading showing limited resistance from bulls. Ethereum had a slightly positive Monday with strong resistance from bears who have won the last two days,” he wrote. “This momentum could take BTC to the $62,500 resistance or even the $58,000 territories.”
Looking ahead, Fournier said BRN’s strategy will be to “reduce exposure to Bitcoin and Ethereum and find a better entry point after the dip.”
This is despite Federal Reserve Chairman Jerome Powell’s comments yesterday on interest rates being widely regarded as accommodating and indicative of FOMC rate cuts in September.
Singapore-based cryptocurrency trading firm QCP Capital said the rally in stocks, which sent the S&P 500 up 1.6% from Wednesday’s close, was not felt in cryptocurrency markets.
“Cryptocurrencies have seen a broad sell-off overnight and into this morning,” the firm wrote in a trading note. “The market remains poised as traders pay close attention to daily ETH ETF outflows and further supply pressure from Mt Gox and the US government.”
Meanwhile, the other top-ranking coins are showing mixed performance.
Solana (SOL) is down 7.2% since yesterday to $169.13. Things are even worse for its most popular meme coins. In the past 24 hours, the most popular meme coins Dogwifhat (WIF) are down 12% and BONK (BONK) is down 9%, according to CoinGecko data.
Their dog-themed competitor, Ethereum OG Dogecoin (DOGE), the only meme coin in Coingecko’s top 10, is down nearly 4% since yesterday and is currently trading at $0.1205.
XRP (XRP) dropped to $0.608, which is 7% lower than it was at this time yesterday.
Binance’s BNB Coin (BNB) has kept pace with BTC and is currently trading at $571, down 2.4% from yesterday. Toncoin (TON), the native token of The Open Network, is down just 0.4% over the past day.
This leaves the stablecoins USDC (USDC) and Tether (USDT), both of which are stable as they maintain their 1:1 ratio with the US dollar.
The Securities and Exchange Commission (SEC) will hold another closed-door meeting with Ripple on Thursday, as the market hopes for a possible resolution to the legal battle between the two entities.
However, the cryptocurrency market remains relatively bearish, with the price and trading volume of XRP down in the last 24 hours.
Ripple holders take no risk
At press time, XRP is trading at $0.60. The altcoin’s price has dropped 6% over the past 24 hours. During that time, trading volume was $27 million, down 27%.
The SEC met before with the digital payment company on July 25. While the outcome of that meeting remains unknown, the Sunshine Act Notice for Thursday’s meeting includes one additional topic of discussion from the July 25 closed meeting: the instituting and resolving injunctive relief. That has market participants speculating whether a settlement is imminent.
In an exclusive interview with BeinCrypto, Ryan Lee, Lead Analyst at Bitget Research, noted that:
“This meeting will discuss possible resolution options for the Ripple Lawsuit. The founder of Ripple Labs said that a legal settlement could be announced soon. If an official settlement plan is released, it could positively impact XRP’s price movement.”
However, an assessment of XRP’s price movements on a 4-hour chart shows a spike in bearish bias as the market awaits the outcome of this crucial meeting. Its Moving Average Convergence/Divergence (MACD) indicator readings show that its MACD line (blue) has crossed below its signal line (orange).
XRP 4 Hours Analysis. Source: Trading View
Traders use this indicator to gauge price trends, momentum, and potential buying and selling opportunities in the market. When an asset’s MACD is set this way, it is a bearish signal that suggests selling activity is outweighing buying momentum.
Additionally, the altcoin relative strength index (RSI), at 46.08, is currently below its neutral 50 line and in a downtrend. This indicator measures overbought and oversold market conditions for an asset.
To know more: How to Buy XRP and Everything You Need to Know
XRP 4 Hours Analysis. Source: Trading View
At 43.83 at the time of writing, XRP’s RSI suggests a growing preference among the market participants for tokin distribution.
XRP Price Prediction: Derivatives Traders Exit Market
The XRP derivatives market has also seen a decline in trading activity over the past 24 hours. According to Coinglass, derivatives trading volume has plummeted 18% and open interest has dropped 10% during that period.
Open interest refers to the total number of outstanding derivative contracts, such as options or futurethat have not yet been resolved. When it drops, traders close their positions without opening new ones. This is a bearish signal that reflects a lack of confidence in any potential positive price movement.
According to Lee, the outcome of the meeting with the SEC “would have a significant impact on the price movement of the token.” If the outcome is favorable, the price of the token could rise towards $0.75 in August.
To know more: Ripple (XRP) Price Prediction 2024/2025/2030
XRP 4 Hours Analysis. Source: Trading View
On the other hand, if no favorable resolutions are reached, the price could plummet to $0.50.
Disclaimer
In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto strives to provide accurate and unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult a professional before making any financial decisions. Please note that our Terms and conditions, Privacy PolicyAND Disclaimers They have been updated.
Bitcoin is now the dominant force in the cryptocurrency market, surpassing 53% of the total cryptocurrency market, a stronger share than it has been in the past three years.
Bitcoin’s market cap now stands at $1.27 trillion, second according to CoinGecko data. In contrast, the total cryptocurrency market cap is $2.43 trillion, with Ethereum occupying 15.9% of the market, worth $389 billion.
Bitcoin’s rise to dominance this year is unusual, as altcoins typically do better than Bitcoin in a bull market. While meme coins made a strong comeback during Bitcoin’s rally to all-time highs earlier this year, the so-called “wealth effect” It has not been appreciated as much by mid-range coins, such as Ethereum and Cardano.
“ETF flows fundamentally alter market dynamics,” he wrote Meltem Demirors, former chief strategy officer at CoinShares, tweeted Wednesday: “BTC gains no longer translate to alts and the longer tail of crypto.”
Bitcoin’s takeover has continued even as the market cap of Tether (USDT) continues to grow, the world’s largest stablecoin and the third-largest cryptocurrency after BTC and ETH. Stablecoins are backed by fiat currencies and are excluded from some measures of Bitcoin dominance due to fundamentally different value models.
The surge continued to pace even after the launch of Ethereum spot ETFs last week, which ironically culminated in a news sell-off event, and net outflows from new investment products since they were launched. This went against the predictions of K33 Search so far, which predicted that ETFs would catalyze ETH’s growth over the next five months.
Despite the poorer performance of the alts, there is reason to believe that they are ready to bounce back very soon.
CryptoQuant CEO Ki Young Ju said Tuesday that whales are “preparing for the next altcoin rally,” as limit buy orders for assets other than BTC and ETH are on the rise.
The executive shared a chart showing how the “cumulative difference between purchase volume and sales volume” has increased in recent months.
“The indicator measures the difference between buy and sell orders over a year,” CryptoQuant told Decrypt. A buy/sell order is a pre-set request to buy or sell a cryptocurrency if it hits a certain price level, which creates resistance and support levels.
“If the trend is up, it means that more people are placing buy orders, showing strong interest in buying,” CryptoQuant said.
By Ryan-Ozawa.
After Monday’s crash, in which BTC fell by several thousand dollars, the scenario has repeated itself once again in the last 12 hours, with the asset falling to a 2-week low of $63,300.
Alt coins followed suit, with most of the market in the red today. SOL and XRP lead the way from the higher cap alts.
BTC Drops To $63.3K
After a violent Thursday last week, when BTC crashed to $63,400, the asset went on the offensive over the weekend and surged above $69,000 on Saturday, as the community prepared for Donald Trump’s appearance at the 2024 Bitcoin Conference in Nashville.
His speech was followed by more volatility before the cryptocurrency settled around $67,500 on Sunday. Monday started off rather optimistically for the bulls as bitcoin hit a 7-week high of $70,000.
However, he failed to maintain his run and conquer that level decisively. On the contrary, he was rejected bad and dropped to $66,400 by the end of Monday. Tuesday and Wednesday were less eventful as BTC remained still around $66,500.
The last 12 hours or so have brought another crash. Bears have pushed the leading digital asset down hard, which has fallen to a 2-week low of $63,300 (on Bitstamp), leaving over $200 million in liquidations.
Despite the current rebound to $64,500, BTC’s market cap has fallen to $1.270 trillion, but its dominance over alts is recovering and has reached 52.6%.
Bitcoin/Price/Chart 01.08.2024. Source: TradingView
The Alts are back in red
Ripple’s native token has been at the forefront of the market challenge in recent days as pumped up to a multi-month high of over $0.66. However, its run was also interrupted and XPR fell by more than 6% in the last day to $0.6.
The other big loser among the larger-cap alternatives is SOL, which has lost 8% of its value and is now struggling to get below $170.
The rest of this altcoin cohort is also in the red, with ETH, DOGE, BNB, AVAX, ADA, SHIB, and LINK all seeing drops between 2 and 5%.
The total cryptocurrency market cap lost another $70 billion overnight, falling below $2.4 trillion today on CG.
Cryptocurrency Market Overview. Source: QuantifyCrypto SPECIAL OFFER (sponsored)
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Disclaimer: The information found on CryptoPotato is that of the authors cited. It does not represent CryptoPotato’s views on the advisability of buying, selling, or holding any investment. We recommend that you conduct your own research before making any investment decisions. Use the information provided at your own risk. See Disclaimer for more information.
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