It is likely that concerns about cryptocurrency contagion have peaked in the interim, according to a research report released on Wednesday by Citi (C). Numerous brokers and market makers have disclosed their counterparty exposure, Celsius filed for Chapter 11, and staked ether (stETH) has started to move back towards parity.
The research added that given that many of the major brokers and market makers in the industry have declared their positions, the “acute deleveraging period” has now concluded.The discount between stacked ether and ether (ETH) has decreased, indicating that some liquidity stress may have subsided.
The bank noted that stablecoin outflows have been stopped and that recent weeks have seen a stabilisation of outflows from cryptocurrency exchange-traded funds (ETFs), which is another encouraging development. Leverage on futures and exchanges is also “beneficial,” it was said.
This report highlights the difference between the bitcoin (BTC) price on Coinbase and the tether (USDT) price on Binance as one of the “intra-market dislocations” caused by the volatility in the cryptocurrency markets in May and June.
The Coinbase price often trades at a premium due to institutional or new entrant demand, but in May, the price began to decline, according to the letter. According to the paper, this “Coinbase premium” is currently also reverting to historical levels, which signals lessened stress on the cryptocurrency market.
According to the report, the difference between bitcoin (BTC) price on Coinbase and tether (USDT) price on Binance is one of the “intra-market dislocations” due to the volatility in cryptocurrency markets this spring and summer. Fears of a contagion have probably peaked, at least temporarily, the note continued.