Crypto Market Forecast: Week of April 24th 2023

The price of Bitcoin (BTC) fell by roughly 9.5% since last week, to ~US$27.5K. Ether (ETH) dropped by over 11% to ~US$1.9K. Binance-coin (BNB) joined in on the fun, falling by nearly 5% to ~$330.

The market took quite a hit this week after SEC Chair Gary Gensler only added to the ongoing regulatory uncertainty on Tuesday in his hearing at the House Financial Services Committee. The hearing underwent several heated exchanges where Gensler was grilled by House representatives.

In the hearing, Gensler was either unable or unwilling to state whether he, as head of the Securities and Exchange Commission, considers Ether to be a commodity or a security. Representative Tom Emmer accused Gensler of driving companies out of the United States to overseas. Representative Warren Davidson noted that he would work towards firing Gensler by introducing legislation “that removes the Chairman of the Securities and Exchange Commission and replaces the role with an Executive Director that reports to the Board where all authority would reside,” and former Chairs would be ineligible to fill the Executive Director position (implying that Gensler would be permanently banned from the job).

On one hand, with Bitcoin’s price having skyrocketed by nearly 83% (to ~US$30.4K on April 18^th) since its ~US$16.6K price point on January 1^st, things seem to be going well (benefiting in part due to failures in the traditional banking system). On the other hand, “crypto” generally still suffers from a great deal of regulatory uncertainty, and this uncertainty, no doubt, has its part in holding asset prices down below what they would be otherwise. With the ongoing obvious hostility towards “crypto” and simultaneous de-dollarization political rhetoric being heard around the world, this seems to be, in large part, by design.

And, as a related side note, Coinbase CEO Brian Armstrong told CNBC that due to US regulatory uncertainty, the public company is looking to invest more overseas. When one considers that Bittrex’s recent announcement that it will shut down US operations along with a more exhaustive list of similar events identified recently by Nic Carter, we are able to clearly see what happens as a result of such unclear (and even hostile) regulation.

As part of an IMF bailout, Argentina looks to be in the midst of possibly tightening its grip on crypto assets. Fortune reported that the Argentinian Senate approved a deal with the IMF that would provide a $45 billion bailout to avoid a sovereign debt default.

To persuade the IMF to approve the bailout, the Argentinian government included a clause in its Letter of Intent, addressed to the IMF, signed by Argentine Minister of the Economy Martin Guzman and central bank president Miguel Pesce. The clause reads that the Argentinian government would “discourage the use of crypto-currencies with a view to preventing money laundering, informality and disintermediation” to “further safeguard financial stability”.

With the IMF’s own website claiming that average consumer prices in Argentina have increased by 98.6% over the past year, it isn’t difficult to see the humanitarian case for allowing the country’s citizens to hold harder assets, such as Bitcoin.

Crypto news for the weeks ahead

April 28

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

May 2-3

The FOMC will be meeting. Futures markets are predicting a high probability of a 25 bps interest rate hike.

May 10

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

Top 10 Crypto Summary

There was a strong drop in asset prices this week for Brave New Coin’s top-10 by market cap. The drop follows SEC Chair Gensler’s exchange at a House Financial Services Committee hearing on Tuesday of last week, during which he was unable to provide long-awaited regulatory clarity. Meanwhile, in the midst of a banking crisis and even possible bank bailouts in the near future (strongly suggesting interest rates would need to go down), Fed Chair Powell reiterates a commitment to keeping inflation at 2% (implying interest rates could continue to go up).

Bitcoin Price Chart

GLASSNODE on-chain analytics for Bitcoin this week looked at key indicators to assess whether the bear market might be behind us. One key factor worth noting is a strong correlation to gold (“the traditional sound money safe haven”) on a 30, 90 and 365-day basis, and this correlation has only strengthened since the recent banking crisis. GLASSNODE concludes that this suggests both (1) a market appreciation for sound money and (2) that “counter-party risk [is] increasingly front of mind for investors”.