Welcome,
This week saw some dramatic events in traditional finance and cryptocurrency. The second and third largest bank failures in US history occurred within just three days, causing concerns about the financial system’s stability.
Meanwhile, the crypto market experienced a rollercoaster ride, with the USDC stablecoin briefly de-pegging to $0.879 before recovering to $1.00, reigniting a widespread bullish trend. The real action, however, is yet to come as the upcoming weeks will likely result in record-high volatility, and the market’s direction can go either way.
Continue reading to find out why.
It’s like there wasn’t a widespread panic in the markets last week. Currently, Bitcoin is up by +8.31% from 7 days ago, reaching a +46.12% YTD price performance. Ethereum, on the other hand, is up by +7.29% or +40.01% YTD. If the uptrend holds, it won’t be surprising if other alts will climb in a similar fashion in the upcoming days.
USDC, DAI Stablecoins Depeg and Recovers In Less Than a Week
Circle’s USDC stablecoin had a de-pegging event, falling to as low as $0.87 on the Kraken exchange because $3.3B of its reserves were held at Silicon Valley Bank. At the time of writing, the price of USDC has returned to $0.999 and over $40B of Mcap.
DAI — a decentralized stablecoin partially backed by USDC also experienced a de-peg to as low as $0.899 before returning to $1.00. These events raised concerns regarding the security of stablecoins as an investment vehicle and store of value.
USA Banks Are Going Bankrupt. Is This Bullish For Crypto?
Last week, the US banking system witnessed the failure of theree large banks, all of which had substantial exposure to the technology sector and cryptocurrency. Silvergate Bank was the first bank to fail, followed by Silicon Valley Bank, which failed due to a bank run after lending heavily to tech startups.
Signature Bank, well-known for its frequent transactions with cryptocurrency firms, was shut down by regulators citing systemic risks. The SVB and Signature Bank failures were the second and third largest in US history, following the 2008 collapse of Washington Mutual during the financial crisis.
Has The FED Turned ON The Money Printer Again?
The Federal Reserve Board of Governors, FDIC, and the US Department of Treasury jointly announced measures to ensure all deposits at failed banks would be honored. Additionally, the Fed launched the Bank Term Funding Program, offering loans to eligible depository institutions pledging qualifying assets as collateral.
These measures have led to speculation among market analysts that quantitative easing (QE) may be back, which has further contributed to the bullish sentiment in the market.
Binance Converts $1B BUSD Reserves To Bitcoin, Ethereum, BNB
Binance’s CEO, Changpeng Zhao (CZ), has announced that the exchange has converted the remaining $1B of its industry recovery fund into Bitcoin, Ethereum, and BNB. According to CZ, the recent events affecting stablecoins and banks, including the capitulation of several crypto-friendly banks and regulatory scrutiny of BUSD, necessitated the conversion.
Binance established the fund in November 2022 to provide liquidity to robust projects experiencing a liquidity crisis.
New York Attorney Labels Ethereum as a Security
Ether fell briefly to its lowest price in two months after the New York attorney general classified it as a security in the state’s lawsuit against crypto exchange KuCoin, stoking fears of a broader regulatory crackdown. KuCoin is charged with failing to register with the state before facilitating transactions on its platform.
US Proposes 30% Tax on Crypto Miners’ Electricity.
President Biden’s budget proposal seeks to reduce mining activity in the United States by taxing the energy used by cryptocurrency miners. The Treasury Department explained that any company using electrical resources would be subject to a 30% tax on the cost of electricity used for digital asset mining.
Top Stablecoin Yield Pools
Gains Network’s DAI pool fell to third place at an average 30D APY of 13.26%. Credix’s USDC pool, on the other hand, climbed second at 13.56%. Solidly V2’s USDC-USDT pool remains first at 21.83%.
Top Blue-Chip Coins Yield Pools
Uniswap V3 keeps dominating the blue-chip category, but this time the USDC-WETH (0.05%) pool is first at a 59.49% 30D average APY rate.
Top ETH Liquid Staking Derivatives Pools
Bifrost’s VETH liquid staking pool crossed the $30M TVL mark, making it the third-highest ETH LSD pool in 30D AVG APY at 5.08%.
The next few weeks will be a wild ride for crypto.
The Federal Reserve’s upcoming announcements, the Mt. Gox legal case, and the Ethereum Shanghai upgrade uncertainty will impact volatility until the rest of the month. Investors will closely monitor the Fed’s decisions on February’s CPI data on March 14 and subsequent decisions on March 22.
Max Yampolsky,
CEO at One Click Crypto
ir@oneclick.fi
DISCLAIMER:
This is not financial advice. This newsletter is strictly educational and does not provide investment advice, solicit the purchase or sale of any assets, or encourage readers to make financial decisions. Please use caution and conduct independent research.
We regularly prepare insightful reports and case studies about crypto trading and the blockchain industry.
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