Banks Tumbles, Rate Hikes Continues, and Bitcoin rallies!
Banks Tumbles, Rate Hikes Continues, and Bitcoin rallies!
Last week, the global banking sector was dealt another blow when news broke about Credit Suisse's troubles.
Despite Swiss regulators stepping in and UBS sealing a $3.25 billion acquisition deal of Credit Suisse over the weekend, global bank shares continued to plummet on Monday, with the Stoxx Europe 600 Banks Index dropping nearly 3% in the morning. Credit Suisse's shares plunged by 60%, while UBS saw a 7% decrease.
Meanwhile, as the banking crisis appears to worsen, the Federal Reserve and five other central banks have joined forces to boost dollar liquidity globally by increasing the frequency of the US dollar liquidity swap lines from weekly to daily.
Some crypto market experts like the former CTO of Coinbase, Balaji, are now saying that these developments clearly point to a potential central bank crisis.
The prominent angel investor drew headlines lately as he placed a $2 million bet that BTC will hit $1 million within the next three months as a result of dollar hyperinflation.
The Fed’s position is still not clear
As all of these events unfold, the market continues to grapple with uncertainty as to which direction the Fed will take. Yesterday, the Fed showed force and announced a continued 0.25% rate on hikes at a time where most macro speculators are starting to think a slowdown or even a shift into Quantitative Easing (QE) will be the more likely course over the medium term.
BTC Soars 30% in a Week!
The past week has seen a major shift in the attitude of crypto market investors, propelled by the intensifying banking crisis that has caused them to reassess crypto's original purpose.
After all, this was exactly the kind of environment Bitcoin was birthed in.
Bitcoin led the pump, soaring over 30% to almost hit $30K while Ether gained 18%. The pump triggered an influx in market volumes, with the highest trading volume recorded since the collapse of FTX back in November 2022.
Bitcoin Outperforming the Broader Markets
What’s particularly interesting about this run is that BTC not only outperformed the broader crypto market but also managed to gain massively amidst the macro pressure. In the past, this has been a signal of a potentially significant bull run, although we could have also reached another local top for now.
Stablecoins May not be that stable
What is the future of stablecoin usage in crypto? With the gradual sunsetting of BUSD, the temporary de-pegging of USDC, a shaky crypto service banking sector, and heightened regulatory scrutiny, this question has never been more important.
Although both USDC and USDT have thus far survived the onslaught from regulators, further attacks, either directly or through crypto banking service providers, could spell a lot of trouble for the crypto market.
Some industry players are already taking precautionary measures, Binance last week converted $1 billion worth of BUSD in its industry recovery fund into Bitcoin, Ether, and Binance Coin (BNB).
Noteworthy Mentions
Optimistic Vs ZK Rollups: A Deep Dive Into Ethereum’s Layer-2 Scaling Solutions
There has been a lot of talk about Layer-2 rollups and their potential to improve the DeFi ecosystem, but at the same time, most people have little to no clue about what they are or how they work. In our latest article, we take a deep dive into this burgeoning ecosystem, distinguishing between optimistic and zero-knowledge rollups.
Industry Shakers
OpenAI has released GPT-4, a powerful AI model that can understand both images and text, a major milestone in the company's advancement of deep learning. This model is more advanced than its predecessor, GPT-3.5, which only processed text. GPT-4 has demonstrated "human-level" performance on various professional and academic benchmarks. For example, GPT-4 has achieved a score around the top 10% of simulated bar exam takers, whereas GPT-3.5 achieved a score around the bottom 10%.
Ethereum’s next big upgrade ‘Shapella’ scheduled for April 12
Ethereum core developers are aiming for April 12 as the release date of the Shanghai-Capella upgrade, also known as Shapella, on the mainnet. This upgrade features Ethereum Improvement Proposal (EIP) 4895, allowing for validator staking withdrawals on the main network. This function was not available at the time of Ethereum's transition to proof-of-stake consensus in September for the purpose of a secure transition. In addition to withdrawals, the Shapella upgrade will also include three further improvements to optimize gas costs for certain operations.
80+ crypto firms eyeing Hong Kong as licensing set to begin in June
Over 80 virtual asset-related firms from mainland China and abroad have expressed interest in setting up operations in Hong Kong as the city strives to become a leading Web3 hub. In a March 20 speech, Christian Hui, Secretary for Financial Services and the Treasury spoke of the interest Hong Kong has been receiving from crypto firms worldwide since October 2022. He also confirmed Hong Kong's plans to implement a licensing framework for virtual asset service providers in June 2023.
Arbitrum Airdrop sparks excitement in the DeFi community
Last week, the Arbitrum Foundation announced the launch of ARB, the native token of Arbitrum. ARB will be airdropped to community members on March 23, marking the official transition of Arbitrum into a decentralized autonomous organization (DAO). As a DAO, ARB holders will be able to vote on decisions that govern Arbitrum One and Arbitrum Nova, networks that enable users to transact on the Ethereum blockchain at high speeds and low costs.