By market capitalization, Bitcoin, the most valuable cryptocurrency in the world, increased 36.06% over the week of March 10 to March 17, reaching a price of US$26,795 at that time. within Hong Kong on Friday. In the same time frame, ether increased 26.67% to US$1,750.
Yet, due to worries that cracks were developing in the American banking system, equity markets had a volatile (understatement) week.
It all began the preceding week when Silvergate Bank's shares plummeted and the bank went into voluntary winding up as a result of a bank run. In order to prevent panic and the possibility of a systemic bank failure, regulators then swiftly shut down Silicon Valley Bank (SVB) and Signature Bank, two significant lenders to the technology and cryptocurrency industries.
It was so serious that the U.S. Over the weekend of March 11, Treasury Secretary Janet Yellen made contact with the White House to request President Joe Biden's consent to begin the takeovers. The Federal Reserve, the Federal Deposit Insurance Corporation, and the Treasury then released an unified statement promising a safety net for American banks.
During the week, when traders drove the stock of other U.S. regional banks, Biden reaffirmed the same point. When the major investment bank Credit Suisse began to falter and the Swiss National Bank offered a US$54 billion bailout, attention turned to Europe. Once First Republic Bank's stock price plummeted, 11 financial institutions on the American side were forced to step up and inject $30 billion into the company.
Despite problems facing banks, Bitcoin remained strong and only momentarily dropped to US$19,654 on March 10. The next day, it regained the US$20,000 milestone and continued to rise for the rest of the week.
Cathie Wood, the founder and CEO of the massive investment management firm Ark Invest, tweeted that Bitcoin, Ethereum, and other cryptocurrency networks didn't miss a beat as the U.S. banking system was buckling under the prospect of bank runs that threatened smaller institutions.
In light of recent regulatory crackdowns on cryptocurrency platforms, Wood seemed compelled to make the following statement: "Regulators ought to have focused on the centrally controlled and opaque failure points looming in the traditional banking system, rather than blocking decentralized, transparent, auditable, and very well evaluate alternative with no central points of failure."
James Wo, the founder and CEO of the cryptocurrency investment company DFG, concurs with Wood.
Wo responded on LinkedIn: "The market's faith in traditional finance was weakened, leading to a movement of funds to the crypto market. As an alternative asset, bitcoin "has proved its better risk and inflation resistance, and will be more accepted by the mainstream," he claimed.
Following the publication of the U.S., Bitcoin then surpassed the $26,000 milestone on Tuesday. According to the Consumer Price Index (CPI), the annual inflation rate fell to 6% in February.
Nevertheless, according to Trade Algo, the U.S. banking crisis, not the CPI report, was what truly sparked Bitcoin's surge.
Once it became apparent that the American banking sector was in peril last Friday, Bitcoin has seen a significant increase in demand. The 25% rally since then is what really matters. The CPI print's rise to US$26,000 is just noise; the actual number was in line with forecasts, and it rapidly dropped back below US$25,000, which is, in my opinion, a crucial threshold from a technical standpoint.
Co-founder of the cryptocurrency anti-money laundering software company AMLBot, Slava Demchuk, ascribed the rise of Bitcoin to investors' hedging.
According to Demchuk, "[Bitcoin's rally] is not necessarily owing to a widespread realization of the non-custodial potential for digital currencies like Ethereum or Bitcoin, but as a mechanism to safeguard against existing financial systems.
The global government involvement, according to Bonnie Cheung, head of marketing at Sending Labs, a software company developing Web3 communication protocols, will help Bitcoin reach record highs.
"The market now has an olive branch to hang onto for the upcoming weeks thanks to the Swiss government's quick action to protect Credit Suisse. This has now established a precedent, together with the US government's conduct. Governments are anticipated to act swiftly if a significant banking crisis starts to develop in the coming weeks. This will strengthen the narrative that will drive Bitcoin to test new highs and further fuel the bullish feeling, according to Cheung.
By 7:00 p.m. on Friday, the market capitalisation of all cryptocurrencies was $1.14 trillion USD. according to data from CoinMarketCap, in Hong Kong, rising 23% from US$923 billion a week earlier. With a market cap of US$520 billion, Bitcoin held 45.2% of the market, while Ether held 18.7% with a market worth of US$215 billion.
Top gainers: CFX and STX soar by more than 100%
One of the top 100 coins by market capitalization revealed on CoinMarketCap this week was CFX, the utility token of Conflux Network, the sole public blockchain in China. Over the week, CFX increased 105.99% to trade at US$0.317.
As Conflux revealed that KuCoin Ventures had funded US$10 million in the system, the token began to gain traction. Moreover, Conflux unveiled CNHC, a CNH stablecoin for international transfers.
The second-largest gainer for the week was STX, the native token of Stacks, the platform for Bitcoin's smart contracts, which increased 100.13% to US$1.09. Interest in the cryptocurrency has grown after the Stacks 2.1 hard fork, which is scheduled for March 20, was revealed. By introducing decentralized mining pools, better bridges, and enabling compatibility among Stacks-native assets like Ordinals and Bitcoin wallets, the upgrade seeks to strengthen the relationship between Stacks and Bitcoin.
Bitcoin to $28,000 US next week?
Systemic danger is currently at the forefront of investors' thoughts. The European Sovereign Debt Crisis and the World Financial Crisis both occurred more than ten years ago. While this banking crisis appeared to have started in the United States, Coutts stated that the situation with Deutsche and Credit Suisse in Europe has been a slow-moving train wreck for years.
Coutts continued, "Short term is not my strong suit, but if we end with a weekly close just above $25,000 then I would have to change my model regime to positive as that would imply we have finished a bottoming process that started in mid-2022 and a fresh bull cycle is beginning.
According to DFG's Wo, the primary factors influencing traditional and cryptocurrency markets in the following weeks will continue to be global banking issues, impending interest rate hikes, and economic trends in the U.S.
The precarious economic environment in the United States, according to Kadan Stadelmann, chief technology officer of bitcoin infrastructure development company Komodo, is currently the primary driver of Bitcoin pricing.
"The Federal Reserve started a multi-trillion dollar program of quantitative easing, reduced the required amount of bank reserves from 10% to 0% on March 26, 2020, and brought about the present inflationary period, which has prompted people to look for alternate means of asset preservation. Bitcoin has emerged as a popular choice, according to Stadelmann.
"Till the US$30,000 mark, Bitcoin won't see any barrier. "The market might drop to US$9,000-13,000 if a systemically important bank, like Credit Suisse, fails," he warned.
"When markets crashed in 2020, Bitcoin was one of the first commodities to recover. According to Stadelmann, "Bitcoin is still far from its all-time highs and may swiftly double to recapture its former highs, especially if the Fed changes direction and launches another program of quantitative easing.
Ahead of the Fed meeting on interest rates on March 21 and 22, according to Mayank Shekhar, co-founder and chief information officer of the play-to-earn game One World Nation, Bitcoin is becoming more and more recognized as a store of value. He anticipates it to trade between US$24,000 and US$27,000 next week.
The decentralized cryptocurrency exchange GammaX Exchange's head of partnerships, Aziz Kenjaev, predicts that the crypto market will calm before the Fed decides on its interest rate policy.
"As for Bitcoin, I anticipate a weekend retest of US$22,350-22,250, but Wednesday's interest rate announcement will continue to draw most of the attention. Any number over this projection will operate as a strong unfavorable sentiment for the US dollar and a strong bullish emotion for Bitcoin. The Fed is forecast to hike rates by 25 basis points. In this regard, I anticipate Bitcoin will hit US$28,100 the following week.
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