Crypto Market Forecast: Week of April 3rd 2023

The price of Bitcoin (BTC) rose by 1.0% this week to ~US$28.1K. Ether (ETH) moved similarly risng by 1.8% to ~US$1.8K. Binance-coin (BNB) dropped by 4% to ~$314.

The global movement towards de-dollarization is picking up. Last week in New Delhi, Russian Deputy Chairman of the State Duma Alexander Babakov suggested that Russia and India could launch a common currency and even include China in the initiative. Brazilian media suggested that the common currency could be a BRICS-wide effort, implying additional participation from Brazil and South Africa. Jim O’Neill, the former Goldman Sachs chief economist who coined the term “BRIC” before South Africa joined the party, recently suggested that the bloc could launch its own currency as a way of shifting away from the dollar’s dominance.

Last week in Southeast Asia, the ASEAN trade bloc met to discuss further development of an ASEAN cross-border digital payment system, utilizing regional currencies to keep goods moving during times of Russian sanctions. The meeting expands on a similar agreement already reached in November last year. Indonesian President Joko Widodo suggested moving away from traditional Western payment processors such as Visa and Mastercard and instead developing solutions from within the region to protect against “possible geopolitical repercussions”. In the present context, this implies the avoidance of sanctions.

And let us not forget, in December 2022, China met with the Gulf Cooperation Council (GCC), and launched what is effectively a “petro-yuan”, with a futures contract allowing for easy convertibility into physical gold. A weaker US dollar strengthens the appeal of crypto that has historically had an inverse relationship with the currency.

NYU professor Nouriel Roubini authored a piece published on Friday MarketWatch warning that hundreds of US banks are “fully insolvent” and most are on the brink of insolvency. Roubini wrote that unrealized losses in the US banking system amounts to $1.75 trillion, roughly 80% of their capital.

Unrealized losses are exactly that: unrealized. But “[if] depositors flee, the deposit franchise evaporates, and the unrealized losses on securities become realized. Bankruptcy then becomes unavoidable”.

Cryptocurrency exchange Bittrex has announced that it will shut down its US operations due to “continued regulatory uncertainty”. Bittrex co-founder and CEO Richie Lai authored an advisory piece on the Bittrex website assuring customers that their funds were safe and sound, ready for withdrawal until April 30^th.

But Lai conceded that “it’s just not economically viable for us to continue to operate in the current U.S. regulatory and economic environment… Regulatory requirements are often unclear and enforced without appropriate discussion or input, resulting in an uneven competitive landscape”.

Crypto news for the weeks ahead

March 21-22

The FOMC will be meeting. In light of the banking crisis, further rate hikes are less probable but worth watching here.

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.

12th April 2023

Ethereum’s next major upgrade since the Merge, the ‘Shanghai’ hard fork, will allow stakers to withdraw staked ETH.

May 2-3

The FOMC will be meeting. In light of the banking crisis, further rate hikes are less probable but worth watching here.

Top 10 Crypto Summary

Yet another mostly flat week this week for BTC and ETH. The price of Ripple’s XRP experienced double-digit growth for the second week in a row: up over 17% as anticipation of a favorable court ruling in Ripple’s case v. the SEC picks up. Cardano (ADA) and DogeCoin (DOGE) both spiked upwards by over 7% each.

Bitcoin Price Chart

GLASSNODE’s report for this week noted net inflows of bitcoins to exchanges of 4.18K: the highest since the aftermath of May 2022’s LUNA implosion. GLASSNODE concludes that investors are realizing profits with the recent price surge and that the vast majority of inflows (almost 93%) are from short-term holders (STH), 65% of the coins in profit.