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News/Bitcoin, Ether retrace while fear of continued bank crisis fuels USDC redemptions

Bitcoin, Ether retrace while fear of continued bank crisis fuels USDC redemptions

Mar 15 2023

last year6 minutes read
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The outlook for the banking system appears to have worsened following news of Credit Suisse’s customer outflows in Q4 of 2022, which rose to over 110 billion Swiss francs ($120 billion). Despite claimed efforts from Switzerland’s second-biggest bank, the outflows have not yet been stemmed.

The situation became even more challenging when Saudi National Bank, Credit Suisse’s largest investor, announced it could not provide additional financial assistance. This led to a further drop in Credit Suisse’s share price, reaching its all-time low at 1.83 francs ($1.98), followed by a decline in European stocks and banks.

While U.S. equities rallied briefly after February’s inflation data came in as expected at 6% YoY, concerns about the banking sector persist. Popular macro strategist Lyn Alden warned that the U.S. banking system is still sitting on hundreds of billions of dollars in unrealized losses due to investments in U.S. treasuries and bonds during 2020 and 2021, amid the Federal Reserve’s aggressive interest rate hikes over the past year.

Moody’s, a credit rating agency, recently downgraded its outlook on the entire U.S. banking system from “stable” to “negative,” citing the risk to banks with significant unrealized securities losses and uninsured U.S. depositors.

Investors may remain cautious about the possibility of a 50 bps rate hike, but some analysts are expecting a 25 bps increase instead. Nigel Green, CEO of the financial advisory firm deVere Group, believes that a 25 bps interest rate increase is more likely given the robust labor market.

In terms of Circle’s short-lived stress, despite the CEO’s claims that the stablecoin issuer has been able to access $3.3 billion of reserves at SVB, investors are still wary. Options settled in the underlying are currently being valued at a premium compared to those settled in USDC in the options market. According to crypto derivatives analytics firm Block Scholes, this indicates investor preference for contracts settled in native cryptocurrencies due to a lingering worry about a potential depeg of USDC.

Although the urgency to exit USDC has diminished, there is still a possibility of more USDC redemptions, according to Riyad Carey, a research analyst at crypto data provider Kaiko. Data from Coin360 shows that USD Coin (USDC)’s circulating supply is currently 38.4 billion, down from its capped value of 43.4 billion on March 10. The Block reported that USDC redemptions have reached $6.2 billion since Friday, which is the reason for the decline.

The cryptocurrency market faces headwinds from various sources, including the U.S. risk assessment analyzing criminal use of DeFi, NatWest bank’s limit on payments to cryptocurrency exchanges, and the European Parliament’s proposal to challenge the immutability of smart contracts.

Bitcoin (BTC) retraced slightly to \(24,800 after surpassing \)26,000 following yesterday’s CPI numbers, ending its two consecutive days of recording double-digit gains. However, Michaël van de Poppe, CEO & founder of trading platform Eight, believes that there is still room for further increases if the Fed pivots given today’s PPI data.

Ethereum (ETH) price also saw a minor pullback after days of outstanding growth. Due to the recent 20% upside since March 10, ETH has seen its seven-day average network-to-value (NVT) ratio drop to the lowest since November 19 at 59.3, as per blockchain analytics firm Glassnode.

SingularityNET (AGIX) emerged as the top gainer among the top 100 cryptocurrencies by market cap. AGIX, which was considered one of the leaders of the AI narrative these days, recorded a huge increase after Elon Musk tweeted an image that contains the word “Singularity.”

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Top altcoin gainers and losers

Gainers:

SingularityNET AGIX (+20.78%)

Stacks STX (+13.25%)

Conflux CFX (+9.50%)

Losers:

Maker MKR (-7.79%)

ApeCoin APE (-7.00%)

Frax Share FXS (-6.73%)

NFT Market Map

SewerPass (+4.32%) and Bored Ape Yacht Club (-51.79%) didn’t see significant gains in trading volume on the day Summoning arrives. In contrast, MutantApeYachtClub (+84.52%) marked a nice surge while investors count down to the event.

MG Land (+37.77%) remained on top while it was listed as one of the first partners in OKX Web3’s NFT trading event.

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Coin360 Daily Digest

Here’s a rundown of the major crypto market news from today.

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