Renewed interest in crypto as volumes hit record high, while VCs pour in over $1 billion in a month

DATA from CryptoCompare shows that Bitcoin's price took a hit over the past week, dropping from around $70,000 to a low around the $65,000 mark before recovering, to now trade at $71,800 amid renewed interest.

Ethereum’s Ether, the second-largest cryptocurrency by market capitalisation, moved in a similar way. Over the past week, ETH’s price dipped from around $3,550 to a low near $3,200, but surged amid a wider crypto market recovery and is now trading at $3,620.

Headlines in the cryptocurrency space over the week kept on focusing on the impact of the launch of spot Bitcoin exchange-traded funds (ETFs) earlier this year, with data revealing that last month their total trading volume topped $111 billion, nearly tripling the $42.2 billion seen in February.

Data revealed over the week also showed that venture capitalists poured over $1.15 billion into the cryptocurrency industry last month, marking the second-largest amount in the past year and a 52% rise from the previous month.

The majority of the capital was allocated to projects focused on developing cryptocurrency infrastructure and decentralized finance applications on the Ethereum blockchain. However, initiatives on other platforms, such as Polygon and BNB Chain, also received financial backing.

Similarly, crypto-focused investment firm Paradigm, co-founded by Coinbase co-founder Fred Ehrsam, is set to raise a new fund of between $750 million and $850 million to bet on the cryptocurrency space further.

Paradigm was behind a then-record $2.5 billion crypto fund in 2021, with its renewed efforts coming amid a wider trend in the space. Hivemind Capital is meanwhile in the process of securing a $50 million fund dedicated to non-fungible tokens, while Hack VC has unveiled a $150 million fund this February and is aiming to gather an additional $100 million for another fund. Galaxy Digital is planning to establish a fresh $100 million fund.

On top of all this, CCData’s latest Exchange Review report has revealed that last month, cryptocurrency trading volumes on centralized exchanges hit a record $9.1 trillion, nearly doubling from the previous month.

The report notes that spot trading outpaced the growth of derivatives trading last month, and that leading cryptocurrency exchange Binance saw its trading volume surge to its highest level since May 2021 after spot volumes on the platform jumped 121% to $1.12 trillion, while derivatives rose 89.7% to $2.91 trillion.

Crypto exchange insurance funds soar by more than $1 billion

Swelling cryptocurrency prices have helped insurance funds held by major cryptocurrency exchanges balloon by more than $1 billion, with Binance’s Secure Asset Fund for Users (SAFU) being the largest, with now over $2 billion in assets.

That figure is based on Bitcoin, BNB, USDT, and TrueUSD holdings. Other major insurance funds include Bitget's, which has risen from an initial $300 million to over $600 million, and those of other exchanges that do not publicly disclose on-chain addresses.

These include Huobi (which has since rebranded to HTX), which announced n 2019 a reserve of 20,000 BTC for its insurance fund, and OKX’s $700 million “Risk Shield” program offering. BitMEX’s large insurance fund to protect users, which holds assets in Bitcoin and USDT, also saw its value surge.

According to on-chain sleuths, the amount of Bitcoin held by leading stablecoin issuer Tether also surged last week. The firm quietly added nearly 8,889 BTC to its reserves, boosting its total Bitcoin holdings to around 75,354 coins worth over $5 billion.

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The stablecoin issuer, which generates revenue by investing the cash used to back its stablecoins in short-term treasuries and other cash equivalents, revealed last year it’s allocating up to 15% of its quarterly profits to Bitcoin purchases.

Judge sides with Fed, denies Custodia Bank's account motion

Wyoming-based crypto-focused bank, Custodia Bank, has suffered a setback in its bid for direct access to the Federal Reserve System over this past week, as Judge Scott Skavdahl of the District of Wyoming sided with the Fed and ruled Custodia isn’t entitled to a master account simply by meeting eligibility criteria.

Custodia sued the Federal Reserve Bank of Kansas City in June 2022 for what it saw as an unreasonable delay in process its master account application.  Following an initial rejection to its application the firm amended its lawsuit, but Judge Skavdahl ruled the Fed has the legal discretion to grant or deny master account access.

Meanwhile, the Tron Foundation has challenged a lawsuit initiated by the US Securities and Exchange Commission (SEC), arguing the regulator is overreaching by targeting actions that primarily occurred outside the US.

Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various cryptocurrencies.