Crypto Market Forecast: Week of March 20th 2023

The price of Bitcoin (BTC) surged by ~34.4% this week to over ~US$28K. Ether (ETH) and Binance-coin (BNB) followed suit by ~19.5% and ~20.5%, trading at ~US$1.8K and ~US$339 respectively.

Bitcoin rallies as confidence shifts away from the Federal Reserve, FDIC, Treasury, and the commercial banks that operate within the fractional reserve, fiat monetary system. Last week, we covered how Silicon Valley Bank (SVB) suffered a bank run that inevitably led to its demise. But upon further analysis, SVB’s demise could turn out to be just the first of many cards to fall – worldwide. Huge Swiss bank Credit Suisse has just been purchased/bailed out by its rival UBS, which in turn has been guaranteed liquidity for the deal by the Swiss government. Meanwhile, the Biden Administration struggles to convince depositors of the US banking system’s solvency under market conditions of “extreme fear”.

While this might be just the moment that Bitcoin was made for (quite literally), regulators seem to be working towards closing the on and off ramps to it.

On March 13^th, the AP reported that former US Representative Barney Frank (Democrat and coauthor of the Dodd-Frank Act) accused the New York Division of Financial Services of taking advantage of the present state of events to shut down Signature Bank in order to send a message to banks providing services to companies working in crypto. “This was just a way to tell people, ‘We don’t want you dealing with crypto’”, he stated.

Frank served on Signature Bank’s board of directors since 2015 and claimed that the bank was solvent at the time of last week’s regulatory takeover. Signature Bank was one of the primary banks providing financial services to “crypto” service providers. Its shutdown follows a broader series of recent regulatory crackdowns, which Nic Carter has coined “Operation Choke Point 2.0”.

As of the present moment, Bitcoin holds 47% of the total cryptocurrency market cap (including all alt-coins), and its price surged by ~US$8.3K since March 10^th, the date of SVB’s failure, a 41% increase.

U.S. Federal Judge Michael E. Wiles scolded the US Securities and Exchange Commission (SEC) in a court decision last week involving a bankruptcy case for Voyager Digital Holdings. Judge Wiles accused the Commission of not providing clear communication for the public record so that companies working with virtual currencies would be able to know how to comply.

The SEC, Judge Wiles claimed, asked to state its position on securities only to him privately. He rejected the request and stated that “to the extent the SEC wanted to say something further… it ought to be stated in the public forum, where all other interested parties could hear and understand the SEC’s position”.

Crypto news for the weeks ahead

March 21-22

The FOMC will be meeting. Possible further additional interest rate hikes will be announced. Markets are presently leaning towards a 25 bps increase.

March 31

The US Bureau of Economic Analysis’ (BEA’s) release of February’s Personal Consumption Expenditures (PCE) numbers will be released. This is one of the primary indicators used by the FOMC when considering interest rate hikes.

April 12

The Consumer Price Index data for March 2023 will be released – one of the indicators the Federal Open Market Committee (FOMC) watches when considering interest rate hikes.

April 2023

Ethereum’s next major upgrade since the Merge, the ‘Shanghai’ hard fork, will allow stakers to withdraw staked ETH. The Shanghai upgrade was scheduled for March but is now targeted for April.

Top 10 Crypto Summary

Crypto assets – almost across the board – experienced their best YTD week with Bitcoin (BTC), by far, the biggest winner. OKB (OKB), Binance-coin (BNB), and Ethereum (ETH) each jumped over 19% as well. As the US banking system stumbles, the spike in Bitcoin’s price (as well as accompanying crypto assets, which tend to follow Bitcoin’s price) appears to be the market expressing a loss of confidence in the legacy banking system.

Bitcoin Price Chart

BNC covered last week a decoupling of USDC’s $1 peg, driven by concens surrounding Circle’s $3.3b reserve deposits held at Silicon Valley Bank. Glassnode’s on-chain analysis this past week noted additional volatility in stablecoins: not observed since the LUNA UST collapse. USDC and DAI both traded below $0.90; meanwhile and BUSD and USDT both traded at a premium (valued at over $1).