Bitcoin manages to hold $28,000 amid the West’s banking turmoil and the East’s growing adoption
On March 19, UBS Group reportedly agreed to purchase Credit Suisse for \(3.25 billion to prevent financial market instability. Although it was a significant discount from Credit Suisse's market capitalization of \)8 billion on March 17, it has helped drive the spike in assets like gold and Bitcoin as investors were afraid of traditional financial failures. On Monday, Gold prices even reached $1,988, just below their strongest levels in 11 months.
The Federal Reserve increased the frequency of the dollar swap lines with central banks from weekly to daily, which aimed to calm exchange rate volatility and prevent strains in the supply of credit. The increase in swap lines cleared the way for an unabated rise in risk assets because they stopped the worldwide “dash-for-cash” scenario, where investors sell everything, including Bitcoin and other risk assets, for cash.
In the meantime, Signature Bank’s deposits and loans were sold to Flagstar Bank, but surprisingly, approximately $4.5 billion in crypto-related deposits were not included. Just last week, Reuters released a report citing two sources that claimed any purchaser of Signature would need to dispose of their cryptocurrency operations as part of a potential recovery strategy. Despite an FDIC representative’s initial denial of these allegations, their recent movement suggests otherwise, according to Nic Carter, a partner at Castle Island Ventures.
Amid the confusion, U.S. crypto firms seem to be seeking financial partnerships in other countries, with more crypto-focused banks in Switzerland reporting higher traffic. Early indicators also suggest that the euro could benefit greatly from the discontinuation of U.S. crypto banking services, as demonstrated by the surge in trading volumes for the BTC-EUR pair during the Silvergate crisis. In fact, the market share of BTC-EUR versus BTC-USD reached an all-time high last week, climbing from 7% in November to 21% of BTC volumes.
Coinbase suggests that the recent banking issues in the U.S. have reinforced the medium to long-term outlook for the cryptocurrency market, indicating a positive trend. According to their report, digital assets are a viable alternative to the existing financial system, and they provide a practical solution to address the system’s inherent weaknesses and shortcomings.
While the U.S. and Eurozone are still waiting for the dust to settle, Hong Kong has taken a step further to crypto and Web3 adoption. Proposed regulations in the city may soon allow retail trading of digital assets, which has resulted in a surge of inquiries from Chinese business owners. The possibility of retail trading being permitted on Hong Kong’s two licensed exchanges, HashKey and OSL, has piqued the interest of Chinese companies and banks.
Since October, over 80 virtual asset companies from mainland China and foreign nations have expressed interest in establishing in the city, and 23 have indicated actual plans to do so. As a result of the growing opportunities, Paris-based cryptocurrency market data provider Kaiko is among the crypto companies planning to move its Asian headquarters to Hong Kong.
Hong Kong’s Secretary for Financial Services and the Treasury, Christian Hui, stated that the city is “well-positioned” to be a leading hub for Web3, and it has allocated $50 million in the budget to “expedite the Web3 ecosystem.” With this in mind, Hong Kong can act as a “test bed” for mainland China to build its own Web3 space, according to crypto lawyer Joshua Chu.
Taiwan is also making strides in the industry by establishing special legislation to regulate cryptocurrency, and its Financial Supervisory Commission will be in charge. Wayne Huang, co-founder and CEO of blockchain-enabled financial institution XREX, showed his support for the news, stating that regulation is crucial for the growth of the industry.
Goldman Sachs has noted that Bitcoin is the best-performing asset year-to-date. Its 51% YTD return has outperformed sectors of information technology by 16% and communication services by 15%, outpaced consumer discretionary by 11%, and left behind Russell 1000 Growth (10%), gold (4%), and the S&P 500 (4%).
While Capriole CEO Charles Edwards, Messari CEO Ryan Selkis, and SkyBridge Capital founder Anthony Scaramucci believe in an upward trend of Bitcoin that can send it to as high as \(100,000 within the next few years, some market commentators remain [skeptical](https://cointelegraph.com/news/will-the-fed-stop-rate-hikes-5-things-to-know-in-bitcoin-this-week). For instance, Matthew Sigel, head of digital assets research at VanEck, still expects Bitcoin to drop to \)12,000 due to higher energy prices.
The macro event of the week is the Fed’s decision on interest rate hikes on March 22. “Currently, markets are pricing in a 62% chance of a 25 bps rate hike. However, markets also see 100 bps of rate cuts by December,” The Kobeissi Letter, a financial analysis resource, wrote in an analysis for long-term rate hikes.
According to crypto data provider CoinGlass, the nominal value of Bitcoin open interest reached its yearly high of \(12.261 billion on March 20, surpassing the old peak of \)12.185 billion set on February 21, indicating new money is flowing into the market. The money seems to be betting on price gains with positive funding rates dominating the Coinglass dashboard at the time of writing.
Despite the positive outlook, investors should remain vigilant as mining costs for Bitcoin have increased at a faster rate than its price over the past month. MacroMicro, an economic data analysis platform, reported that mining costs per block peaked at \(33,000 in the 30 days leading up to March 20, while BTC prices only reached \)28,500, resulting in losses for miners.
According to the In/Out of Money at Price (IOMAP) data on IntoTheBlock, Bitcoin’s downward movement could find support at \(27,000, where 307,000 addresses purchased 346,000 units of BTC. To refute the bearish outlook, Bitcoin's price would need to climb above the \)29,500 level, where 345,000 addresses previously purchased 130,000 BTC.
As per the weekly report from digital asset investment and trading group Coinshares, digital asset investment products experienced outflows for six consecutive weeks, totaling \(95 million. Bitcoin alone saw [outflows](https://twitter.com/CoinSharesCo/status/1637793637680521220?s=20) in investment products totaling \)113 million last week, while short-Bitcoin products recorded an inflow of $35 million.
The rapid increase in the price of Ethereum (ETH) was unexpectedly halted on Saturday, following the transfer of 18,657 ETH worth \(33 million by a whale to Binance exchange. As a result, the value of the cryptocurrency dropped to \)1,759 before recovering to \(1,800 on Sunday. However, today it appears that ETH is continuing its downward trend, currently trading at a discount of -1% with a value of \)1,745.
Top altcoin gainers and losers
Conflux CFX (+13.24%)
Solana SOL (+8.33%)
Stacks STX (+8.23%)
FTX Token FTT (-6.46%)
Gemini Dollar GUSD (-6.23%)
Kava KAVA (-4.74%)
NFT Market Map
4 out of the top 5 NFT collections saw a drop in trading volume growth today, except Bored Ape Yacht Club (+47.31%).
However, this blue-chip project ranked behind smaller collections, including Wrapped Cryptopunks (-25.92%), MG Land (-31.86%), and MetaZellys ETH (0.00%), when it comes to the volume traded in dollar terms.
Coin360 Daily Digest
Here’s a rundown of the major crypto market news from today.
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Disclaimer: None of the information here constitutes financial advice and market participants are advised to conduct their own research since cryptocurrencies are speculative assets with considerable risks.