Elevated USDC Redemptions Continue, Signature Investigated Ahead of Closure
Market Update
- Equities are falling today as trouble in the financial sector continues, with Credit Suisse (CS) announcing it had found “material weaknesses” in its financial reporting for 2021 and 2022. Banks led US markets lower today as the S&P fell 1.74%.CS shares are down over 96% from their all-time high as its largest investor, Saudi National Bank, stated it would not provide any financial support. Trading was halted for CS and several other European banks. Treasury yields remain highly volatile as the bid-ask spread on the 2-,10-, and 30-year Treasuries jumped to their highest level in 6 months. The US 2Y yield fell 10%, offsetting yesterday’s temporary rise and reaching a new local low of 3.8% after yielding above 5% just last week. Lower-than-expected retail sales and PPI releases today strengthened the case for a potential Fed pause next week, with probabilities of a pause or 25 bp hike divided between ~48% and 52%, respectively. After hitting a YTD high of $26.5k amid a liquidation-driven short squeeze, BTC has since pulled back to $24.2k, following traditional markets lower. ETH 4.75% is underperforming, down 4.95% over the last day.
- Despite regaining its peg to $1 after losing it this past weekend, USDC redemptions remain elevated, with net redemptions reaching over $4.5 billion since Friday. According to data from Arkham, Circle’s stablecoin saw its largest redemption on record, with over $723.5m burned in a single transaction. Circle issues dollar-pegged stablecoins to investors that provide an equivalent collateral value and burn USDC as investors exit the stablecoin. Net redemptions occur when the burnt value exceeds the value flowing into USDC, lowering the overall market cap and amount of USDC held on-chain. Net redemptions could indicate worsening investor sentiment on the overall market or, in this case, with the specific issuer Circle. Circle was seen by many as the most reliable U.S regulated stablecoin issuer to rival off-shore unregulated Tether. Tether has been heavily criticized for its lack of an official audit, although it claims to be fully collateralized. USDC holders remain nervous after Circle revealed it held $3 billion with now-defunct Silicon Valley Bank, leading to the de-peg. While that value has now been guaranteed, this episode has shown that Circle is not as untouchable as once thought and that its USDC stablecoin can de-peg if institutions that Circle banks with experience financial instability.
- Crypto-friendly bank Signature had been facing scrutiny from regulators ahead of its closure by the New York State Department of Financial Services (NYDFS)on Sunday. While NYDFS cited “a significant crisis of confidence in the bank’s leadership” and claimed the closure had “nothing to do with crypto,” many in the industry have speculated otherwise. Barney Frank, Signature board member and ex-congressman behind the Dodd-Frank Act, told CNBC that regulators shut the bank down to send “a very strong anti-crypto message.” The bank had faced scrutiny from the US Department of Justice and SEC over its anti-money laundering practices. However, the allegations had not materialized into penalties ahead of the closure. According to an NYDFS spokesperson, the bank’s leadership failed to provide “reliable and consistent data” after facing a wave of withdrawals over the weekend. Frank claimed regulators did not provide executives enough time to gather the required information before the closure. Whether coordinated or not, crypto companies have continued losing potential banking partners amid weakness in the financial sector.
Daily Technical Strategy
Mark L. Newton, CMT
Head of Technical Strategy
The breakout in Bitcoin's dominance chart has occurred precisely at a time when the selloff in risk assets has begun to intensify. Wednesday's about-face in many cryptocurrencies looks to be a temporary negative after the recent run-up. However, BTCUSD looks like one of the better areas to position in the short run technically and should demonstrate better relative strength in the next 3-5 days. This breakout of the six-week consolidation on Monday 3/13 provided a spark for BTC that might result in a test of last June's peak before Bitcoin's relative strength starts to give way. Overall, until the broader pullback in risk assets starts to abate, BTCUSD looks like an attractive relative spot to position within the broader cryptocurrency space.
Daily Important Metrics
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All metrics as of March 15, 2023 12:55 PM
All Funding rates are on bps
Crypto Prices
| Symbol | Market Cap | Last Price | Daily Change | Year to Date | Relative to BTC YTD |
 BTC | $470B | $24,313 | ↓ -5.87% | ↑ 47% | |
 ETH | $199B | $1,629 | ↓ -7.50% | ↑ 36% | ↓ -11% |
 ADA | $11B | $0.3215 | ↓ -11% | ↑ 30% | ↓ -17% |
 MATIC | $9.6B | $1.10 | ↓ -11% | ↑ 44% | ↓ -2.74% |
 DOGE | $9.1B | $0.0687 | ↓ -10% | ↓ -2.04% | ↓ -49% |
 SOL | $7.3B | $19.02 | ↓ -12% | ↑ 92% | ↑ 45% |
 DOT | $6.9B | $5.87 | ↓ -9.18% | ↑ 35% | ↓ -12% |
 LINK | $3.4B | $6.49 | ↓ -8.31% | ↑ 17% | ↓ -30% |
 NEAR | $1.6B | $1.90 | ↓ -12% | ↑ 49% | ↑ 2.65% |
Exchange Traded Products (ETPs)
| Symbol | Premium to Nav | Last Price | Daily Change | Year to Date | Relative to BTC YTD |
| GBTC | ↓ -40% | $12.90 | ↓ -4.37% | ↑ 56% | ↑ 8.84% |
| BITW | ↓ -57% | $9.41 | ↓ -3.04% | ↑ 75% | ↑ 28% |
| ETHE | ↓ -52% | $7.40 | ↓ -7.27% | ↑ 55% | ↑ 8.70% |
| BTCC | ↑ 0.10% | $4.48 | ↓ -3.45% | ↑ 48% | ↑ 1.09% |
News
QUICK BITS
CoinDesk Russian banks may currently be cut off from the SWIFT international payments network. But, despite wide-ranging international sanctions against the Kremlin, mon... |
Decrypt.co Why Was Signature Bank Really Shut Down? Deliberate attack on the digital asset industry or run-of-the-mill regulatory action? Depends who you want to believe. |
MARKET DATA
BTC Manager USDC records largest single burn amid bank collapse Amid the recent USDC depegging, USDC has now recorded the largest single burn having seen a burn of 723 million USDC as the stablecoin recorded almost $2.2b bur... |
DOSE OF DEFI
CryptoSlate Lido expects staked Ethereum withdrawals in May Liquid staking protocol Lido (LDO) has set a May target for staked Ethereum (stETH) withdrawals. The post Lido expects staked Ethereum withdrawals in May appea... |
FUNDRAISING AND M&A
Coin Telegraph KuCoin leads $10M funding for Chinese yuan stablecoin issuer Circle’s investment arm has joined a funding round for CNHC, the issuer of the eponymous stablecoin pegged to the offs... |
CoinDesk Voyager-Binance.US' $1B Deal Should Be Halted, U.S. Government Says The Department of Justice doesn’t like provisions that would render the company immune from prosecution for former wrongdoing |
PRODUCT UPDATES AND PARTNERSHIPS
CoinDesk India and UAE To Collaborate on CBDC Development India and the United Arab Emirates (UAE) will collaborate on central bank digital currencies (CBDCs) by jointly conducting at least one pilot. |
CoinDesk Who Is Cross River Bank, USDC Stablecoin Issuer Circle’s New Partner? The New Jersey-based regional bank has an increased profile after the trio of recent bank collapses – and will likely face added regulatory scrutiny. |
HACKS, EXPLOITS, AND SCAMS
Coin Telegraph Euler Finance's offer to hacker: Keep $20M or face the law The hacker committed a $196 million flash loan attack on the Ethereum-based lending protocol on March 13. ... |
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