Tuesday, 28 March 2023

Market Summary

Market Summary 28 March 2023

Bitcoin Price: US$ 27,124.91 (-3.01%)
Ethereum Price: US$ 1,715.22 (-3.31%)  


Bitcoin’s value plummeted below $27,000 when the US Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance and its founder, Changpeng Zhao. The allegations state that Binance knowingly provided unregistered crypto derivative products to US customers, which is a violation of federal law. Many investors in the crypto community are not surprised by this news, and the implications of the lawsuit are still unclear. However, asset managers’ recent increase in long positions on Bitcoin indicates that institutional investors continue to view the asset positively. Despite this, the CFTC’s lawsuit against Binance could affect investor sentiment in the future.

Morgan Stanley analysts have suggested that bitcoin’s recent rally can be partly attributed to expectations of increased US dollar liquidity to support the banking sector, following a number of forced closures. However, other factors are also at play, including a drop in bitcoin’s trading order book liquidity, which has made the cryptocurrency more vulnerable to price swings. In addition, the increasing dominance of Binance in the bitcoin market has allowed traders on the platform to set daily prices, while the popularity of USDT as a stablecoin has risen, but hasn’t fully offset the decline in other stablecoins like BUSD and USDC. Meanwhile, MakerDAO, the decentralised autonomous organisation that governs the Dai, has voted to keep USDC as the primary collateral for Dai, rejecting a proposal to diversify collateral into GUSD and USDP. While the risk of a cascading bank run in the US has been reduced, some risks still remain associated with using USDC as collateral, including exposure to uninsured bank deposits and a weaker legal structure

According to Bloomberg Intelligence’s senior commodity strategist Mike McGlone, Bitcoin is likely to outperform all other cryptocurrencies following the banking crisis that has shaken confidence in traditional financial institutions, as Bitcoin becomes more attractive as a hedge against banking risk. McGlone believes the US Federal Reserve’s reluctance to ease monetary policy despite the banking crisis will drive the US economy into a recession, ultimately favoring Bitcoin to outperform all other cryptocurrencies, including Ethereum. Meanwhile, to mark the occasion of the launch of the new Polygon zkEVM network, Ethereum creator Vitalik Buterin sent out the first transaction that included a hidden message, which said: “A few million constraints for man, unconstrained scalability for mankind.”

MicroStrategy, the largest corporate holder of Bitcoin, has paid off its $161 million loan from Silvergate Bank and acquired 6,455 more BTC worth $150 million. By doing so, the company has ended its credit agreement with Silvergate and reclaimed the 34,619 BTC that was being held as collateral against the loan. Meanwhile, Polygon has announced the final mainnet for its zkEVM product, which is a scaling solution that offers scalability, security, and EVM compatibility. Also, dYdX has announced the launch of its V4 private testnet, which will run for two to three weeks, and after that, a public testnet will be launched by the end of July, as the decentralised derivatives exchange prepares to leave Ethereum and move to Cosmos.




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