Binance coin loses $6 billion in market cap, bitcoin holders hopeful on $30,000 by end of March

Yahoo Finance crypto reporter David Hollerith joins the Live show with updates on Binance and bitcoin.

Video Transcript

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- Investors piling out of Binance Coin, with more than $6 billion of outflows over the past month. David Hollerith here to discuss what is happening here, my man.

DAVID HOLLERITH: Dave, so two weeks ago, the US-based crypto trust company Paxos, which creates an issues the Binance USD stablecoin, the stablecoin you're talking about, was ordered to stop creating new versions of the token by New York regulators. And since then, we've seen about $6 billion fall from the market cap of this coin. A little more than half of that total has flowed into two larger stablecoins, Tether and Circle's USDC. So prior to the regulatory crackdown, Binance USD was the third largest stablecoin. But this is the beginning of-- excuse me, not the beginning, this is the latest of what's been a series of kerfuffles and financial questions that have been thrown towards Binance in the wake of FTX's collapse.

There's also been this "Forbes" article that came out on Monday that drew attention to the fact that Binance may be moving assets in-- or, excuse me, the assets that support stablecoins linked to this stablecoin, which are also known as B tokens. They've been moving those outside of the exchange's wallets and to other parties, including trading firms, which also include Alameda Research. So there's a lot of questions about that transaction flow and what it could mean for customers' assets.

And Binance has rebuked a lot of these charges. Their statements have been mixed. But more or less, they've said that the report has been a misunderstanding of blockchain data.

Now, while it remains to be seen what is correct, the CSO of Binance or shortly after Paxos experienced this crackdown had said that regardless of how the exchange keeps cryptocurrency in wallets, it keeps a separate ledger for corporate transactions, for corporate money and customer money. But it's really not been made clear whether or not that's actually being divided in practice in how they keep the money in wallets. And if what Forbes is alleging is true in backing, I will say, with blockchain data, it would seem that at least for a period in late August, Binance did move funds that were supposed to back one of its-- a few of its stablecoins to trading firms, which would mean the company was lending and not necessarily backing its assets one for one, as they have said they've been doing. But, again, this is all something that we're going to continue to watch as it unfolds.

- We certainly will. And, David, while we have you, Bitcoin. Let's talk about the price that we have seen, the rally that we have seen since the start of the year. You're looking at Bitcoin up just over 40% since January 1.

What do you make of this massive rally that we've seen? And we're starting a new month today, the first day of March. Enough for that momentum to continue?

DAVID HOLLERITH: Yeah, January was momentum fueled for cryptocurrencies. And through February, we actually saw the rally fizzle out. Cryptocurrencies in general ended yesterday, the end of February, flat. And while volatility has fizzled, traders are still piling into the crypto options market.

And they have concentrated bets, according to the data, from platform Amber Data of Bitcoin hitting $30,000. And that's the highest concentration, although there's a lot of bets that have been placed between $25,000 and $30,000. And $25,000, of course, is the price that traders have been looking for Bitcoin to rally past. It did breach that price point in February briefly. But that's been the point of contention here.

And the expiration date for options right now, the highest amount is set for March 31. So unless the price goes higher before then, we could expect a large liquidation. But, that being said, it looks like because there's little resistance in between $25,000 and $30,000, if the price does get a momentum rally this month above $26,000 or something like that, we could very easily see $30,000.

- All right, David Hollerith, always great to have you there. It's certainly been incredible watching the price action as of late when it comes to crypto and Bitcoin more specifically.