Crypto Currents: Institutions spark rebound after crypto firesale

The crypto market is showing remarkable resilience, rebounding swiftly after a historic liquidation event wiped over $500B from digital asset values. Institutional investors are leading the charge, pouring billions into crypto funds at fire sale prices., even as a prolonged U.S. government shutdown stalls a slate of potential ETF approvals. Stay up on the crypto news that matters with “Crypto Currents,” daily from The Fly. Join us at 2 PM ET for your essential briefing on the fast-moving world of cryptocurrency on FlyCast radio. Also, subscribe to our YouTube channel for the Crypto Fly By weekly recap.

INSTITUTIONAL PLAYERS CAPITALIZE ON THE DIP: Despite last week’s historic market crash, institutional conviction remains strong, with crypto investment products seeing $3.17B in inflows. According to Binance, citing a report by CoinShares, bitcoin (BTC-USD) funds led the charge, attracting $2.7B. Further highlighting this trend and turning turmoil into tokens, bitcoin miner MARA Holdings (MARA) purchased 400 BTC for $46.29M following the market tumble, according to analysis of on-chain data. The move solidifies its position as the second-largest corporate holder of bitcoin.

MARKET RECOVERS FROM HISTORIC LIQUIDATION EVENT: The market is recovering from what CoinDesk described as possibly the worst liquidation event in crypto history, which saw over $19B in leveraged positions wiped out. The flash crash was initially triggered by escalating U.S.-China trade tensions. However, markets began to stabilize over the weekend after both nations softened their rhetoric, Cointelegraph reports. The total crypto market cap has since climbed, with trading volumes hitting a record $53B last week.

EXCHANGE TURMOIL AND COMPENSATION: The extreme volatility strained exchange infrastructure, particularly at Binance. The world’s largest crypto exchange saw several assets, including Ethena’s USDe stablecoin, temporarily de-peg from their intended values. The Block reports that Binance has since paid out $283M in compensation to affected users. While the exchange attributed the issue to the market downturn, the incident has raised questions about liquidation transparency, according to crypto.news. CoinDesk noted that the USDe price dislocation was isolated to Binance and not a global de-peg event.

INDUSTRY MOVES AND PUBLIC LISTINGS: In the midst of the market chaos, major players continue to build. Cointelegraph reports that Galaxy Digital (GLXY) has raised $460M to convert a former bitcoin mining site in Texas into a large-scale AI data center. In other news, tokenization firm Securitize is reportedly in talks to go public via a merger with a SPAC merger sponsored by Cantor Equity Partners II (CEPT), according to Bloomberg. On the product front, Coinbase (COIN) is preparing to launch a new credit card with American Express (AXP) that will offer up to 4% cash back in bitcoin, according to a press release..

GOVERNMENT SHUTDOWN STALLS ETF APPROVALS: The U.S. government shutdown has entered its third week, delaying the approval of at least 16 pending spot crypto ETFs. As Cointelegraph reports, the stalemate in Congress has left the SEC operating with only essential staff, putting a halt to final decisions on a wave of new products, including those for solana (SOL-USD) and XRP (XRP-USD). Analysts expect a “flood” of launches once the shutdown ends.

PRICE ACTION: As of time of writing, bitcoin was trading at $114,336.76, while ether was trading at $4,125.57, according to price data from CoinDesk.