Banks in Turmoil, Bitcoin Rising
Market Update
- Cryptoassets are surging this Monday afternoon due to continued turmoil in the banking industry and a violent repricing of rates. Despite the government guaranteeing customer deposits of the fallen SVB and Signature Bank, investors are keyed in on the unrealized losses remaining on the balance sheets of regional banks. As we discussed on Friday, we anticipated an orderly wind-down of SVB and that rates rolling over would benefit cryptoassets. BTC is leading the way, up 22% since Friday evening, while ETH trails right behind, up 20% over the same period. We are witnessing extraordinary rate volatility, with the U.S. 2Y down 44 bps and the U.S. 10Y down 20 bps. Meanwhile, the DXY is down 1% as the Fed Funds futures market is no longer pricing in a 50 bps increase in rates at the next FOMC meeting. In fact, according to the futures market, traders think there is currently a 23% chance that rates will remain where they are. This pricing makes sense considering that the financial system's vulnerability now centers around low-yield long-duration treasuries that will be more underwater should the Fed decide to hike.
Source: CME Group
- As alluded to above, the failure of Silicon Valley Bank (SIVB 0.00% ), heavily invested in long-term securities, sparked concern among depositors and the broader financial markets. As a result, regulators have designated both SVB and Signature (SBNY 7.37% ) as systemic risks, meaning they can be wound down in a way that fully protects depositors. The Federal Reserve has also created a new Bank Term Funding Program to safeguard institutions affected by the market instability caused by the SVB failure. The Fed facility will offer loans of up to one year to banks and other institutions and ask for high-quality collateral such as Treasuries, agency debt, and mortgage-backed securities. The Treasury Department is providing up to $25 billion from its Exchange Stabilization Fund as a backstop for any potential losses from the funding program. Still, it is not expected to be needed. Shareholders and some unsecured creditors will not be protected and lose their investments. The markets have welcomed the moves, with crypto prices rallying strongly. The wind-down of Signature bank surprised many in the crypto industry as it seemed to be in decent shape on Friday. The destruction of the last notoriously crypto-friendly bank will certainly hamstring the on-off ramps for many funds operating in the crypto space but does not detract from our constructive outlook on digital asset prices.
- Coinshares' weekly report reveals that digital asset funds experienced a substantial outflow of $255 million last week, which represents 1% of total assets under management. The outflows were primarily from short and long Bitcoin products, and North America and Europe both showed negative sentiment. The outflows reversed the year-to-date inflows of $82 million. 3iQ experienced the largest outflows of $219.4 million, while BlackRock's ProShares saw net inflows of $10.7 million. Although this was the largest dollar-figure outflow on record, it was not the largest percentage of total assets under management.
Daily Technical Strategy
Mark L. Newton, CMT
Head of Technical Strategy
Ethereum's recent act of recovering prior February lows has provided a healthy recovery in recent days that should allow for an upcoming test and breakout above February highs. Its pattern since January has nearly exactly replicated that of Bitcoin, and both have shown above-average relative strength on the recent rebound. While ETHUSD is relatively weaker than BTCUSD in the near-term, the act of getting back over 1750 should fuel a move back higher to 2050 to test the area near prior highs in August 2022. Overall, the recent rally in ETHUSD is a constructive development at a time of broader asset volatility, and it's fair to say that Cryptocurrencies have been responding more to Treasury gains, than Equity losses in the past 48 hours. Dips should provide buying opportunities for ETHUSD and the area at $1550-1625 looks appealing to buy any pullback ahead of an upcoming rally into mid-April.
Daily Important Metrics
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All metrics as of March 13, 2023 11:49 AM
All Funding rates are on bps
Crypto Prices
| Symbol | Market Cap | Last Price | Daily Change | Year to Date | Relative to BTC YTD |
 BTC | $454B | $23,499 | ↑ 14% | ↑ 42% | |
 ETH | $201B | $1,645 | ↑ 12% | ↑ 37% | ↓ -4.54% |
 ADA | $12B | $0.3480 | ↑ 13% | ↑ 41% | ↓ -0.87% |
 MATIC | $10B | $1.16 | ↑ 6.93% | ↑ 52% | ↑ 10% |
 DOGE | $9.5B | $0.0719 | ↑ 8.36% | ↑ 2.52% | ↓ -39% |
 SOL | $7.8B | $20.32 | ↑ 12% | ↑ 105% | ↑ 63% |
 DOT | $7.0B | $5.99 | ↑ 9.61% | ↑ 38% | ↓ -3.99% |
 LINK | $3.5B | $6.71 | ↑ 8.86% | ↑ 21% | ↓ -21% |
 NEAR | $1.7B | $2.01 | ↑ 11% | ↑ 58% | ↑ 16% |
Exchange Traded Products (ETPs)
| Symbol | Premium to Nav | Last Price | Daily Change | Year to Date | Relative to BTC YTD |
| GBTC | ↓ -39% | $12.66 | ↑ 13% | ↑ 53% | ↑ 11% |
| BITW | ↓ -55% | $9.46 | ↑ 12% | ↑ 76% | ↑ 34% |
| ETHE | ↓ -49% | $7.85 | ↑ 12% | ↑ 65% | ↑ 23% |
| BTCC | ↓ -0.06% | $4.44 | ↑ 21% | ↑ 47% | ↑ 4.68% |
News
QUICK BITS
CoinDesk Silicon Valley Bank Crisis a 'Cyprus Moment' for Bitcoin: Crypto Observers The Fed's aggressive rate hikes and balance sheet reduction have caused a historic bank failure — fashioning a real-time ad for Bitcoin self-custody, observers ... |
CoinDesk Silicon Valley Bank Clients Can Fully Access Funds After FDIC Creates New Bridge Bank Loans and other services will resume on normal schedule Monday following a switch to a new bridge bank, the regulator said |
The Block Gemini had no customer funds, GUSD at Signature Bank Gemini said it currently has no money deposited at Signature Bank. All customer funds are held at JPMorgan, Goldman Sachs and State Street Bank. ... |
The Block CME Group opens trading for event contracts on bitcoin futures CME Group is now offering event contracts on Bitcoin futures, adding to its suite of ten event contracts tied to its benchmark futures markets. ... |
CRYPTO INFRASTRUCTURE
Coin Telegraph Circle taps Cross River as banking partner, expands ties with BNY Mellon Circle announced a new banking partner after Silicon Valley Bank’s failure, and is expanding ties with BNY Mellon. ... |
CoinDesk Coinbase Officially Suspends Binance USD Stablecoin Trading Cryptocurrency exchange Coinbase (COIN) has delisted the Binance USD (BUSD) stablecoin, according to a tweet on Monday. |
FUNDRAISING AND M&A
The Block Framework and Bitkraft lead $6 million seed funding into gaming studio Jungle Bitkraft and Framework Ventures co-led a $6 million seed funding round into Jungle, a Brazil-based web3 gaming studio. The post Fram... |
Decrypt.co Web3 Game Publisher Jungle Raises $6 Million for Mobile NFT Shooter Jungle has attracted investments from prominent VC firms including Bitkraft Ventures, Framework Ventures, and Delphi Digital. |
MINING
The Block Marathon Digital says it has access to funds held at Signature Bank Marathon Digital has $142 million at Signature Bank, which was closed by state authorities on Sunday. The post Marathon Digital says... |
HACKS, EXPLOITS, AND SCAMS
CoinDesk Euler DeFi Protocol Exploited for Nearly $185M The losses occurred over four transactions in dai (DAI), wrapped bitcoin (WBTC), staked ether (sETH) and USDC. |
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