Binance announces changes to stablecoin handling, bitcoin falls below $20,000

Yahoo Finance's David Hollerith breaks down the latest news in the crypto markets.

影片文字轉錄稿

[AUDIO LOGO]

[MUSIC PLAYING]

AKIKO FUJITA: Welcome back to "Yahoo Finance Live." Time now to take a look at the crypto markets, how they're faring this morning. Looking at Bitcoin and Ether, both trying to kind of claw their way back from the lows here. We are seeing Bitcoin trading above that key support level of $19,000, but still below $20,000. Down about 2/10 of a percent. Ether seeing a bigger gain today, up more than 4% at $1,667.

Well, staying with crypto, major exchange Binance says it will change how it handles certain stablecoins. Most notably, allowing auto conversion of tokens to give users more choice of withdraw. To tell us more about what this means, let's bring in our very own crypto reporter David Hollerith. So, David, break it down for us. For those who are holding, what does it mean?

DAVID HOLLERITH: So the decision from yesterday from Binance can sort of be interpreted as maybe the latest move in the stablecoin wars, as it were. So stablecoins make up at least 80% of total trading in the crypto markets on any given day. And the fourth, fifth, and sixth largest cryptocurrencies are stablecoins-- tether, USD coin, and Binance's own USD stablecoin. So as of March-- or as of September 29, Binance is effectively automatically converting anyone's holdings of Circle's USDC coin and-- as well as two other smaller coins into its own stablecoin.

And on the one hand, Binance has said the move will enhance liquidity and improve capital efficiency for users. Basically, what this means is that users will not have to convert themselves if they want to transfer into Binance's stablecoin, which has certain benefits in terms of the trading fees offered to it. But on the other hand, this is also sort of looked as a move by Binance to shore up its own-- the liquidity of its own stablecoin.

If you just look at other major crypto exchanges, FDX and Coinbase, they do something similar for USDC, the stablecoin, where they automatically convert it to US dollars. That's obviously-- the key difference here is that Binance isn't doing that. They're just converting it to their own stablecoin. So in some ways, this is going to make it a lot easier for them to maybe have to have market makers do less tactics to keep up the liquidity of all their stablecoins. But on another way-- in another angle, it sort of looks like a power grab by Binance.

AKIKO FUJITA: And, David, in a separate crypto story, we're in the final countdown for this big merge upgrade that's happening to Ethereum. It feels like we've been talking about it forever. And this is, of course, the blockchain for the second largest coin Ether. What's the latest? I mean, how much of these price moves we're seeing today is pegged to that as well? What do we expect?

DAVID HOLLERITH: Yeah, so the expectations that we know for when the merge is finally completed, which is sometime between September 10 and the 20, with most people saying something like 8:00 AM on September 15. That's sort of like the majority projection, but we really don't know. But when the merge is completed at that time, the expectation is that Ethereum's energy consumption will drop by 99.5%.

And then from there, what we're looking at is a few different things that are interpreted. But really, the only other immediate thing we know is that the Ethereum merge trade has kind of become the most popular trade in crypto. Over the last month, plenty of people have been talking about it. Also during the same period, as of today, the last upgrade before the final merge has been initiated.

So that means that on major cryptocurrency exchanges like Binance and Coinbase, you cannot withdraw or deposit any Ether or Ethereum-linked cryptocurrencies. So trading will continue, but deposits and withdrawals will be stalled for that period. So that's all we know right now. But we can be-- sort of see this as like the biggest trade in crypto for this month. So a lot to pay attention to around there.

AKIKO FUJITA: OK, it'll keep you busy over the next several days. David Hollerith with Yahoo Finance, thanks so much for that.