Riding The Wave News Summary 145

Bitcoin Liquidity on the Brink as Market Makers Pare Back in Crypto Markets, Stripe's John Collison lays out crypto strategy, & more.

May 11, 2023

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Bitcoin Liquidity on the Brink as Market Makers Pare Back in Crypto Markets

The apparent exit or reduction in trading by Jane Street and Jump Crypto, two influential cryptocurrency market makers, has the potential to disrupt the fragile flow of liquidity across the industry, an analyst at Kaiko told CoinDesk.
Jane Street and Jump are paring back crypto trading in the U.S., Bloomberg reported Tuesday, amid the regulatory clampdown that spawned out of FTX's collapse in November. Jump's crypto division will continue to expand globally while Jane Street will scale back on its growth plans, Bloomberg reported.
"The news is not necessarily surprising given recent developments," Kaiko analyst Riyad Carey told CoinDesk. "What's concerning is that liquidity has still not recovered from Alameda's collapse, and a slowdown with two of the biggest surviving market makers could weigh on liquidity even further. It's a bit surprising how slow the industry has been to fill Alameda's shoes."

An absence of liquidity, which is what the crypto industry will experience as several market makers jump ship, causes an increase in volatility as it takes less capital to move an asset. This, coupled with this highly-leveraged nature of crypto markets, has the potential to create a credit risk that could spread to all sectors of finance.

Full Article

Stripe's John Collison lays out crypto strategy

It's still TBD whether crypto will be an integral part of Stripe's business, but the company sees promise in certain applications of the technology, Stripe president John Collison said at the Axios BFD event in San Francisco.
Why it matters: Stripe isn't betting the farm on crypto, but the company does find it useful for certain use cases.

Since then, the company has built out crypto payouts and fiat-to-crypto on-ramps, in part to support cross-border payment needs in geographies where payment rails are lacking.
"Accepting money is one thing, but paying out money to the rest of the world — especially long-tail countries with poor banking rails is another thing," he said.
"It works better than fiat payments in a lot of cases," he added.

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PayPal Discloses Nearly $1B of Crypto Assets on Balance Sheet

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