- Crypto markets seem to be pulling a 180 after the Fed announced a relief package for customers who lost money in the recent banking crisis.
- The ripple effect of the ongoing collapse in the US banks could trigger a panic selling if US CPI comes in hotter than expected.
- ApeCoin and dYdX are two altcoins that are likely to face a massive sell-off this week.
Things are getting really dicey out here as the United States Federal Reserve’s move to cover Silicon Valley Bank (SVB) puts the US regulators in the spotlight. This week is important due to a few things happening in the macroeconomic landscape.
Banking and stablecoin crisis: A recap of the past few weeks
- To be fair, the whole FUD started with the US Securities and Exchange Commission went after US-based stablecoin issuer Paxos.
- Following this was the collapse of Silvergate bank after an en-masse exodus of the company’s crypto customers decided to just up and leave.
- Following the collapse of Silvergate was Silicon Valley Bank, the fallout from which was widespread. It also caused US-based USDC Stablecoin issuer Circle to have $3.3 billion in cash reserves stuck at the bank.
- Soon thereafter, Federal Deposit Insurance Corporation (FDIC) issued a statement to shut down Signature Bank, stating systemic risks.
Interestingly enough, Bitcoin price dropped 10% between March 9 and 10 but recovered all the losses in the next two days.
US CPI and why longing Bitcoin now could be a bad idea
The Fed seems to have placed a backstop and assured the customers a full recovery of the funds stuck in these banks. This development has caused crypto markets to prevent a further collapse and instead undid the losses witnessed over the weekend.
While the short-term spike may seem enticing, investors need to note the United States Consumer Price Index (CPI) is set to be released on March 14. In his recent testimony, Fed Chairman Jerome Powell noted that curbing inflation was much harder than previously anticipated. Higher-than-expected CPI numbers could trigger a rally for US Dollar, causing the risk-on assets to collapse.
So, market participants need to wait before getting on board the hype train.
Also read: Fed Chair Powell targets bringing inflation back to 2%, Bitcoin price stays around $22,000
Token unlocks
With the markets in uncertain conditions, altcoins provided a respite for traders due to their inherent volatility. This week, two major cryptocurrencies will be unlocking their tokens – Decentralized exchange dYdX and ApeCoin on March 14 and March 17, respectively.
dYdX will be releasing 6.52 million tokens worth nearly 14 million. 2.8 million will go toward trading rewards, and 2.5 million will be redirected to the community treasury. The remaining 115K tokens will be distributed among liquidity providers as rewards.
Despite this large-scale unlock, roughly 1.7 billion or 79% of the tokens, will remain locked.
As for ApeCoin, roughly 40.6 million APE tokens worth $175 million will flood the markets in three days. Out of which, 4.1 million will go Yuga Labs, and 2.2 million will be sent to Yuga Labs founders.
Top3 read
Bitcoin price makes comeback above $20,000 after $422 million in BTC options were liquidated
Did Binance CEO just present us with a buy signal?
Important reads
Silicon Valley Bank UK arm acquired by HSBC for one Pound
USDC mayhem catalyzes recovery rally in Uniswap and Curve DAO
Bitcoin, Ether retrace weekend losses as bears see $183m in short liquidations
Circle's USDC depeg as crisis, these traders saw an opportunity
Did Binance CEO just present us with a buy signal?
Coinbase assures recovery of customer funds, as Circle mints $407 million USDC
Watch these five cryptocurrencies for a potential price rebound next wee
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Bitcoin Price Forecast: Analysts anticipate increased volatility as the US presidential election looms
Bitcoin price teased its all-time high of $73,777 last week but declined to trade below $69,000 on Monday. Analysts suggest that market volatility is expected to rise as the US presidential election approaches.
Litecoin poised for double-digit decline after breaking ascending trendline
Litecoin breaks and closes below an ascending trendline, signaling a change in market structure. On-chain metrics paint a bearish picture, as LTC’s dormant wallets are active, and the NPL indicator shows a negative spike.
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC, ETH and XRP decline ahead of US elections
Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) all faced resistance at crucial levels ahead of the US Elections, leading to a price decline. As of Monday, they neared key support levels, and a firm close below these marks could signal further declines.
21Shares files S-1 for XRP ETF amid ongoing tension between Ripple and SEC
21Shares filed an S-1 registration with the Securities and Exchange Commission (SEC) on Friday for an XRP exchange-traded fund (ETF). While the chance of approval is slim with the current SEC administration, the landscape could change after the upcoming elections.
Bitcoin: New all-time high at $78,900 looks feasible
Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.