Crypto Market Week In Review: March 16, 2023
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A lot happened this week. Cryptocurrency banks like Silicon Valley Bank, Signature Bank and Silvergate are starting to fall like dominoes. There are signs of trouble for Credit Suisse in Europe. However, the cryptocurrency market performed surprisingly well. So let's take a look at what happened to cryptocurrency this week. As always, we will first look at the Bitcoin and Ethereum price list in USD and then analyze the most important news. Let's begin!
What happened to cryptocurrencies this week?
As we do every week, today we will start the review with a brief analysis of BTC and ETH price charts.
Bitcoin price in dollars this week
The USD Bitcoin price is showing strong results this week. Just seven days ago, the price of BTC fell below the psychological barrier of $20,000. However, the US banking crisis led to a bank run and investors began pouring their funds into digital gold. As a result, Bitcoin temporarily jumped to around $26,500 on March 14.
Since then, there has been a slight retreat. So what is the price of bitcoin today? Currently, the price of BTC is around $24,400 and its market cap is around $474 trillion. According to Koingeco, BTC had a 7-day high of around $26,500 and a 7-day low of $19,600. The dominance of digital gold in the global cryptocurrency market exceeded 42.5%.
Investor sentiment rose slightly along with the price of BTC. Currently, the fear and greed index is at 52 points, which is neutral.
Ethereum price in dollars this week
Ethereum's chart looks almost the same as Bitcoin's. Initially, ETH formed a large red candlestick that fell below $1,400. However, with the collapse of cryptocurrency banks, it quickly recovered and at one point even reached $1,800.
Since then, there has been a pullback and the price of ETH has stabilized around $1,650 with a market cap of $200 billion. ETH hit a 7-day high around $1,800. On the other hand, the 7-day low was around $1,370. Smart contracts, NFTs and DeFi chains dominate with exactly 18%.
This week's biggest cryptocurrency gains
While Bitcoin and Ethereum performed very well this week, some altcoins fared better.
The biggest cryptocurrency enthusiasts this week among the top 100 projects are a mix of projects. From HALO, which just completed its ICO, to Stacks, which is deploying smart contracts for Bitcoin, to AI Token, which follows OpenAI's release of its new AI model, GPT-4.
So which projects performed best this week?
- Halo Coin (HALO) - 92.7%.
- Stacks (STX) - 49.9%
- Fusion (CFX) - 49.8%
- Career - 31.9%
- SingularityNET (AGIX) - 31.6%.
ImmutableX (IMX), Render (RNDR) and Fetch.AI (FET) were among the projects that offered investors over 20% returns.
Cryptocurrency news of the week
We have already analyzed the price of Bitcoin and Ethereum in USD and know which cryptocurrencies were the most profitable this week. So, like every week, we start our review of the biggest news in the world of crypto, and this week there is a lot of it.
Silvergate Announces Liquidation
On March 8, the dark scenario that has engulfed the digital asset community in recent months became a reality. One of the two largest cryptocurrency banks, Silvergate, has officially ceased operations after the company was unable to cope with the massive outflow of investors following the November crash of the FTX exchange.
From the beginning of 2023, all reports of Silvergate Bank are based only on negative news. Huge losses in the last quarter of last year, numerous lawsuits against investors, investigations by the US Department of Justice, the loss of key partners and the decline of the stock resulted in the inevitable.
Silvergate Capital announced liquidation. The company was the second largest institution for cryptocurrency players after New York Signature Bank. Up until a certain point, Silvergate's biggest customer was the FTX exchange, which suddenly crashed last November. The incident severely damaged the sector's reputation in the media and lost investor confidence in custody institutions.
What is ETH security? A lawyer from New York thinks so.
SEC Chairman Gary Gensler stated that all cryptocurrencies except BTC are securities. After all, he emphasized that behind such assets are "groups of entrepreneurs" who have their "legal personality". According to him, this is enough to consider cryptocurrencies and tokens as securities.
The above will have huge implications for the market as it means that the blockchain industry is fully under the control of the SEC. Furthermore, Gensler believes that any token or cryptocurrency (except, again, Bitcoin) is issued illegally.
New York Attorney General Letitia James appears to have reacted to his comments. He sued the KuCoin exchange for selling unlisted securities. He specifically mentions ETH, but gives Terra (LUNA) and TerraUSD (UST) as additional examples.
But where does this conclusion come from? James noted that cryptocurrency "represents a shared investment." In addition, their income "comes mainly from the efforts of others". So this is a direct reference to the famous Howie test, which has helped determine whether assets are securities for nearly 100 years.
James is primarily focused on Ethereum. He believes that the cryptocurrency is closely related to Vitalik Buter and the Ethereum Foundation. The latter organized an ICO in 2014 to raise funds for network development. It collects BTC from investors and gives them ETH in return.
In addition, the prosecutor said that the website of the Ethereum Foundation also promoted Ethereum as an investment. He added that many Ethereum users today see ETH "as a digital store of value." In addition, they expect the price to increase after the change in the ETH issuance algorithm.
Additionally, "the trial stake phase affected the core functionality and incentives for holding ETH," allowing investors to participate in ETH.
The White House wants to plug a hole in the US budget by raising taxes on cryptocurrencies
US monetary policy has not been perfect for many years. Similarly, the economic situation of the country can be good. The US budget deficit is currently $3 trillion.
This week, the White House published an announcement, among other things, about changes to the tax system for cryptocurrency organizations. According to the plan, the US government wants to withdraw about 24 billion dollars from this sector.
One of the items is the removal of the exemption from the "tax loss recovery" strategy. It relies on traders selling their cryptocurrencies at a loss to pay less tax and then buying them back. In the United States, its use for stocks and bonds is prohibited due to "false sales" regulations. However, this has not been the case with cryptography until now.
As most people entering the market in 2021 are currently losing their investments, this move will benefit the government.
In addition, Biden also proposed doubling the capital gains tax rate on the sale of digital assets. It is currently 20%. After the changes proposed by the White House, it will be 39.6%.
The bad news about this announcement is endless. The White Paper also states that the activities of Bitcoin and other companies involved in issuing proof-of-work digital currencies should be restricted.
As part of this, new taxes are proposed to be imposed on mining operators. It is expected to eventually constitute up to 30% of electricity consumption. The new law will come into effect in 2024. For the first three years, fees will gradually increase each year. First, it will be 10%, next year 20%, and in 2026 it will be 30%. In addition, miners must submit periodic reports on "the amount and type of electricity used and the cost of that electricity."
Bank collapse in Silicon Valley: the biggest bankruptcy in a decade!
On March 10, the Federal Deposit Insurance Corporation officially announced that US financial regulators had shut down Silicon Valley Bank (SVB). The company's bankruptcy was the biggest in the last 15 years. SVB is a key player in technology (including blockchain) and venture capital. As a result, major companies are still deciding what to do with their assets.
The California Department of Financial Protection and Innovation shut down SVB, according to an official notice issued by regulators. In addition, the Federal Deposit Insurance Corporation (FDIC) was appointed as supervisor. The FDIC, in turn, opened the National Deposit Insurance Bank in Santa Clara to hold insured bank deposits.
The USDC lost its peg to the dollar after the SVB fell and recovered a few days later.
SVB announced on Wednesday that it plans to raise $2 billion. The reason was to cover the losses incurred as a result of the sale of his property. As a result, depositors panicked and rushed to withdraw their deposits. The company that decided to withdraw its funds from the bank is called Circle.
However, it was reported on Friday that the recall order initiated on Thursday has not yet been fully processed. In the end, $3.3 billion worth of assets were locked up in a bank that is part of the USDC pool of stablecoins. The fear has increased this week as well. This follows the release of a recent audit report that as of January 31st, $8.6 billion, or about 20% of the stablecoin's reserves, were placed in various financial institutions. Two of them are the bankruptcy of Silvergate and Silicon Valley Bank.
To make matters worse, the USDC stablecoin has lost its peg to the US dollar. In just a few hours, the price of this stablecoin fell by 11% and at one point fell below 90%.
A day later, the Circle issued a separate statement. The company decided to use its "company resources" to cover the deficit of its blocked reserves in the SVB account.
The Federal Reserve announced the creation of a $25 billion fund to protect the reserves of banks and other companies. The additional funds will ensure sufficient liquidity for financial institutions in the face of potential problems.
These bailouts from the Circle and the Fed saved the USDC, which restored parity with the dollar a few days later.
US inflation falling but still high: What will the Fed do?
US inflation was 0.4% m/m and 6% y/y in February, the Bureau of Labor Statistics (BLS) reported on Tuesday.
On the contrary, core inflation, excluding fuel and food prices, increased by 0.1 percentage point. up to 0.5% per month. This has come as a result of the increase in the cost of housing (rent). Fuel and fuel, on the other hand, are available cheaply.
Although the information is not public, the American authorities reassure and emphasize that things are going in the right direction. US President Joe Biden commented on the new information as follows:
"Today's report shows that annual inflation has fallen by a third since last summer and the unemployment rate is near its lowest level in 50 years. This is the slowest annual growth since September 2021."
Important news for investors. That's because they mean the risk of a 50 basis point Fed rate hike is small. There are many indications that the US Federal Reserve will maintain its 25 basis point rate hike.
However, falling inflation is not the only factor that could make it more difficult for the Fed to raise interest rates. The Federal Reserve's monetary policy can also be harmed by bank failures. So far, Silvergate, Silicon Valley Bank and Signature Bank have filed for bankruptcy. But it cannot be ruled out that this is not the end. It is possible that the authorities will have to stimulate the economy again with the press, which will lead to the growth of financial markets, as well as the increase of inflation.
আরেকটি আরেকটি যে ফেডের নীতিগুলি পর্যন্ত যা অর্থনীতিকে অর্থনীতিকে মুদ্রাস্ফীতি উদ্দেশ্যে উদ্দেশ্যে কাজ কাজ না না কমছে কিন্তু কিন্তু কিন্তু কিন্তু.
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