Crypto Weekly: 13 – 19 March 2023
USDC issuer Circle announced that it will use its reserve funds to compensate for any lost liquidity as a result of the closure of Silicon Valley Bank and stated that it expects USDC to recover its US dollar peg by 13 March.
According to sources, Silicon Valley Bank held more than $6 billion for prominent crypto VCs, including A16z, which invested in Yuga Labs; Paradigm, which invested in Compound, Cosmos, and Uniswap; and Pantera, which invested in 1inch, Ankr, and Zcash.
Amidst the uncertainty, Tether’s USDT stablecoin still holds its lead as the market’s most dominant USD stablecoin, with its market share amongst stablecoins surpassing the 54% mark, its highest level since 2021. This can perhaps be attributed to the rapid decline of BUSD, Tether’s most significant competitor, which has been in freefall since its issuer Paxos, announced that it would halt minting new BUSD tokens due to pressure from the New York Department of Financial Services. Since then, BUSD fell below the $9 billion mark from a $16 billion market capitalization.
Meanwhile, President Joe Biden has proposed a tax on cryptocurrency mining, starting at 10% in the first year and increasing by 10% annually up to a maximum of 30% in the third year. If passed, the tax will take effect from 31 December 2023.
In other news, the US Securities and Exchange Commission has rejected the proposal for the establishment of VanEck Bitcoin Trust, an ETF that invests in the Bitcoin spot market. This is the third rejection due to concerns about market manipulation.
Finally, Coinbase has launched Wallet as a Service, a new tool that allows businesses to create and provide customers with access to Web3 wallets.
Weekly Technical Analysis: 13- 19 March 2023
Curve DAO (CRV)
Trading and Investment Considerations For The Week
The cryptocurrency market is in the middle of great turmoil thanks to the shutdown of Silicon Valley Bank by the US authorities. This collapse of SVB has affected USDC-issuer Circle’s deposits, leading to USDC losing its dollar peg. This has cause significant volatility in the market.
The market is also worried about the US monetary policy moving forward, with the FED set to increase its interest rate by 0.5%, higher than the expected increase of 0.25% initially. The chairman of the Federal Reserve recently announced that inflation is still high and that the use of tighter monetary policies and a more hawkish approach is necessary.
This week, highlights to keep an eye out for include the announcement of the US CPI figures for February, which will be released on Tuesday, 14 March. The market expects the figures to be at 6.0%, down from the previous month’s figure of 6.4%. If CPI numbers exceed expectations, it is highly likely that the FED will proceed with its plans to increase interest rate by 0.5%, which could negatively impact the cryptocurrency market. On the other hand, if the figures are lower than expected, the pressure to increase interest rates may decrease, which could have a positive impact on the cryptocurrency market.
Furthermore, the PPI index, an indicator of production inflation, will also be released on Wednesday, 15 March, and should be closely monitored for potential impact on the US dollar.
Recently, the Fed has set up a $25 billion fund to support short-term lending for banks, aiming to avoid any disruption in the flow of funds. As the situation continues to unfold, it is essential to keep a close eye on the developments in the market and to take appropriate measures to minimize risks.
-Cryptocurrency and Digital tokens are highly risky; investors may lose all investment money. Investors should study information carefully and make investments according to own risk profile.
– Past Returns/Past Performance does not guarantee future returns/performance.
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