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While the market is having a slight meltdown, at least we’re seeing a few potentially positive catalysts on the horizon.

Or, at the very least, some pockets of good news for crypto. So far this morning, we’ve gotten a huge financing raise from Flowdesk, a $16 million raise from Berachain liquid staking protocol Infrared, and we have Core Scientific partner CoreWeave filing for an IPO.

None of these will have an impact on market momentum. But, hey, you don’t see these types of announcements in a bear market. Just trying to be positive here. 

Meanwhile:

• In the past 24 hours, more than 294,000 traders were liquidated with total liquidations coming in around $977 million, per CoinGlass.

• SOL, ADA and XRP have erased gains from Sunday’s post from President Donald Trump. SOL and ADA are down nearly 20% this morning, while XRP’s down around 12% as of publication time.

• DeFi’s TVL is down to $93.3 billion in the past 24 hours, a decline of about 8.4%.

🧘 Take a deep breath

Well, so much for a rebound after last week.

Instead, the market is reacting to a whole new set of issues — ones that aren’t tied to ByBit or North Korean hackers. 

President Donald Trump’s announcement that the US will proceed with 25% tariffs on Canada and Mexico today sent both traditional equities and crypto into a freefall. The overall crypto market cap is now sitting at $2.82 trillion, an 11% decrease over the past day, according to Blockworks Research data. 

Yikes. 

Bitcoin is in the low $80,000’s, a far cry from the $90,000 level we cheerfully retook after President Trump posted about the strategic reserve. 

Over on Derive.xyz, “traders are showing strong demand for high-leverage calls, with 49.4% of BTC premiums and 45.5% of ETH premiums being calls bought. This indicates that traders are seeking upside exposure in the wake of the large price fluctuations.”

This shouldn’t be too surprising if you’ve been following the price action. But “BTC’s 7-day implied volatility jumped from 47% to 70%, and 30-day volatility rose from 47% to 55%,” Dr. Sean Dawson, head of research at Dervive.xyz, noted. Following the rally, the volatility temporarily settled but it’s since spiked again.

Matt Mena, crypto research strategist at 21Shares, told me: “[T]he market reaction reflects renewed fears of inflationary pressures and economic uncertainty, but this selloff appears to be an overreaction. Many investors had anticipated these moves, and as futures markets adjust overnight, we could see stabilization when trading resumes [this morning].”

Yesterday, I thought I had aptly named the PayPal section “green shoots” but it turns out today’s the day with some actual green shoots — at least if you ask Mena. 

“Despite the short-term volatility, the long-term outlook for the crypto sector remains bright. Notably, CME Solana futures are scheduled to begin trading on March 17, a significant milestone that could accelerate the SEC’s approval timeline for Solana spot ETFs,” he added.

Whether or not movement around SOL ETFs reignites a rally remains to be seen. But basing it off of what we’re currently witnessing, I’m a skeptic. 

While folks like Eric Trump encourage people to buy the dips, I take a bit more of a cautious position. There’s nothing wrong with taking advantage of lower prices, but there are a lot of unknowns currently — and no market reacts well to that. 

Don’t believe me? Let’s take a look at some altcoin data from Kaiko. 

“A year ago, the top 10 altcoins by market cap accounted for 58% of altcoin volume on U.S. platforms and 50% on offshore exchanges. As of last week, those shares had risen to 77% and 66%, respectively,” Kaiko noted. 

Pantera’s Paul Veradittakit told us yesterday that we could see a potential increase in the likelihood of an altcoin season. This type of volatility seems to put that hope on the backburner for now. 

What’s clear is that we’re continuing in the same market that we’ve been in for the last few weeks and it doesn’t look like we’ve broken the pattern yet. 

If anyone has a crystal ball, you know how to reach me.

— Katherine

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• Flowdesk announced a financing round worth a whopping $102 million, with the additional capital going toward a global expansion to “meet growing demand.”

• Roughly 77% of the funds stolen from Bybit are still traceable, CEO Ben Zhou said, making the next couple of weeks “critical” to freeze said funds. 

• Yuga wasn’t the only one to get good news, either. The SEC also closed an investigation into Kraken on Monday.

😌 Looking for stability

I can’t escape one line of conversation in any of my industry chats nowadays. And that’s regulation. 

It doesn’t matter what we’re talking about, we always inevitably end up discussing the regulatory environment. And it totally makes sense — even if it gets a little tiring. 

Take a recent conversation I had with Andrew O’Neill and Mohamed Damak of S&P Global Ratings. While discussing the overall stablecoin environment, O’Neill told me that they expect stablecoin regulation to happen sometime this year. 

(Yes, yes I know, we just talked about stablecoins yesterday, but bear with me here.)

It’s a timeline that perhaps you’re not shocked about, given that we’ve seen movement on that front over on Capitol Hill. But it’s something to keep in mind, especially if other potential catalysts — like a SOL ETF — aren’t on the table this year. 

O’Neill said that, outside of the regulatory environment, he’s focusing on an interesting event that occurred early last month.

“One trend that we've been watching in the last couple of weeks is you had this drop in price of ETH on February 3 and you had a lot of investors getting liquidated or rotating out of ETH on that day or subsequent days, [and] rotating into stablecoins,” O’Neill said.

“There's some interesting things to see there, you can see the increase in balance on Ethena. You can also see how the Ethena protocol has shifted in its own asset composition toward more stablecoins after that event,” O’Neill continued. Sky’s outstanding issuance also jumped in late February. 

“So I think it's a good indicator of the level of interest and adoption in those yield bearing stablecoins … and how, but also how some of these DeFi protocols have interrelationships between each other,” he noted.

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Learn more at ZKsync.io/empire.

On our minds: Stablecoins