On Tuesday, Binance, the globe’s largest cryptocurrency exchange, temporarily suspended withdrawals of the stablecoin, USDC. Cryptocurrency markets were broadly positive in the wake of the release of the US Consumer Price Index (CPI) data for November. Focus now quickly shifts to the result of today’s Federal Open Market Committee (FOMC) Meeting and decision.
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Binance Withdrawals Suspended
The world’s largest cryptocurrency exchange Binance, paused withdrawals on Tuesday of the USDC stablecoin as it carried out a “token swap.” After about 8 hours after the announcement, USDC withdrawals were resumed. In a tweet, Binance said it had “temporarily paused” USDC withdrawals while it does a “token swap.” This comprises swapping one cryptocurrency without the need for fiat currency.
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Furthermore, Changpeng Zhao, known as CZ, the CEO of Binance, tweeted that the cryptocurrency exchange was seeing a rise in USDC withdrawals.
This activity can surely only question the stability of Binance, given the November collapse of rival exchange FTX, alongside reports from Reuters of a possible U.S. government criminal investigation into Binance.
US CPI Post-Mortem
Erratic price action was seen across the major cryptocurrency markets on Tuesday in the wake of the release of November US CPI data. The data came in better than markets expectations of 7.3% YoY, posting at 7.1% YoY, with the core data (excluding food and energy), rising 6.0% YoY, less than consensus for 6.1%.
This saw a broad rally in riskier assets, notably US stock averages. However, many risk assets saw these advances fade through Tuesday’s session, but Bitcoin and Ether were notable in holding onto their gains. For broader financial markets, the intermediate-term “risk on” theme that has been evident since October/ November remains intact.
Fed Focus
Today’s focus is very much now on the outcome of the FOMC Meeting. Market expectations remain for a 50bp rate hike, with an outside chance of a 75bp increase. According to futures pricing from CME Group data on Tuesday for the Fed’s “terminal rate,” this has eased to 4.85% (in both the May and June 2023 contracts), down from prior indications closer to 5.00%.
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