Satoshi Nakamoto's Prediction Came True, Investors Sought a Sense of Security in BTC and ETH
A Quick Update
Satoshi Nakamoto’s Prediction Came True, and Bitcoin Went Up to $24,000
After the collapse of three banks in succession, the First Republic Bank was suspended after the pre-market crash of 67%, and the West Bank of Alains was suspended. PacWest Bancorp triggered the circuit breaker at the beginning of the market.
Satoshi Nakamoto wrote in the Bitcoin Genesis block on January 3, 2009, that “the Secretary of the Treasury is on the verge of rescuing the bank again”, which came true again today 14 years later - the United States Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corporation issued a statement to rescue the market. The day after the release of the joint statement, US President Biden stated that the rapid action of the government made Americans believe that the US banking is safe. Meanwhile, Biden stated that he would require Congress and regulators to strengthen banking rules and conduct comprehensive accounting for what happened to banks. “We will not stop here. We will take all necessary measures. We must prevent this from happening again.”
On the other hand, under the influence of the Bitcoin futures event contract transaction launched by the Chicago Mercantile Exchange and the support of regulators to the deposits of Silicon Valley Bank and Signature Bank, Bitcoin has increased by nearly 10% in the past 24 hours, returning to the $20,000 threshold, with the highest price of $24,488, and is now quoted at $24,380. Bitcoin positions of about $180 million were cleared in the past 24 hours, and short positions were about $180 million. USDC and DAI gradually recovered their pegged prices, and now they have recovered to around $0.99. However, Curve 3pool is still in an inclined state, with DAI and USDC accounting for more than 45% and USDT accounting for only about 6.6%.
Investors Seek a Sense of Security in Bitcoin and Ethereum, and the Market is Expected to Increase Interest Rates
According to the data of glassnode, about 0.144% of Bitcoin and 0.325% of Ether were withdrawn from the exchange reserves with the news of the collapse of Silicon Valley bank. In US dollars, Bitcoin and Ethereum with a total value of more than $1.8 billion flowed out of the exchange last month, especially in the current hostile regulatory environment, which shows the degree of investor confidence.
Source: glassnode
Meanwhile, according to Twitter, the on-chain data showed that the selling sentiment had subsided, and the market turned to increase its position - especially among long-term holders, which may mark the beginning of the upward trend of Bitcoin and the entire crypto market.
In terms of interest rate forecast, according to CME data, the probability of the Federal Reserve raising interest rates by 25 basis points is 76%, and the probability of not raising interest rates is 24%.
Previous Review: The Latest “Victim” of the FTX Incident Appears
On March 8, Silvergate Capital, which could not afford to fall for a long time, announced that it would gradually close and liquidate its cryptocurrency-friendly bank Silvergate in view of industrial regulation and development. So far, Silvergate has become the latest “victim” affected by the FTX crash.
According to the official documents of Silvergate Capital, the liquidation plan of Silvergate Bank includes “full repayment of all customer deposits”, and the best way to solve the claim problem and protect the residual value of its assets is currently being uated.
After the release of the news, the cryptocurrency market fell. Bitcoin and Ethereum fell to $19,549 and $1,379 at one time. The share price of cryptocurrency-related enterprises also fell. Coinbase’s share price fell 7.81% on the 9th to close at $58.09; Signature Bank’s share price fell 12.18% to $90.76; and Shares of Metropolitan Bank fell 7.98% to $50.37.
Only two days later, Silicon Valley Bank was closed by Canadian regulators and taken over by FDIC for the reason of “insufficient liquidity and insolvency”. In just 48 hours, Silicon Valley Bank failed with $211 billion of assets, becoming the largest financial institution failure in the United States after the collapse of Washington Mutual Bank in 2008. Yesterday, Signature Bank became the third bank to fail in a week. The Federal Reserve announced yesterday (February 12) that it would close the Signature Bank to be taken over by the FDIC for the purpose of “protecting depositors”.
The Storm Swept the Crypto Market, and the Stablecoin and DeFi Were in a Mess
Circle, one of the Stablecoin giants, is at the center of this turbulent storm. The collapse of Silicon Valley Bank directly led to the depegging of more than 10% of the Stablecoin USDC issued by Circle (Circle holds $3.3 billion of reserves in Silicon Valley Bank). According to earlier data from PeckShield , on March 10, Circle burnt about $2.7 billion of USDCs, of which Coinbase redeemed at least $1.78 billion of USDCs, and high-frequency trading giant Jump Trading redeemed about $96 million of USDCs.
USDC’s price trend in the past seven days - source: coingecko
The bad situation of USDC caused a series of domino effects: about 10% of the DAI with USDC as collateral was depegged, and the lowest was $0.89; Frax with more than 80% exposure to Circle fell to $0.87; Curve 3Pool tilt continues to worsen, and users have been affected by panic to exchange USDC and DAI for USDT. According to media reports, the USDC/USDT dropped to 0.93 at its lowest on the 11th.
Price Down, Confidence Up
It is obvious that the depegging of the Stablecoins is essentially caused by panic selling, but some cryptocurrency funds, including a wallet allegedly called Vitalik Buterin, seem to be confident in the final market recovery. According to the content of the PeckShield report, the address marked Vitalik was deposited with 500 Ethers in Reflexer, which was minted into the 150,000 Reflexer（RAI), and then the 132,500 RAI was replaced with 378,500 USDC, and the 17,500 RAI was replaced with 50,000 DAI.
Source: Twitter@PeckShield
According to lookonchain data, companies such as Jump Trading, Wintermute Trading, Genesis Trading, and BlockTower Capital bought USDC before the weekend.
“Silicon Valley Bank Opened on Monday”, Sweeping the Gloom of the Market
On the 12th, the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the U.S. Treasury jointly issued a statement that from March 13, depositors of Silicon Valley Bank and Signature Bank will be free to use their arrears, and the losses arising from any decisions relating to the two banks will not be borne by taxpayers.
Source: the official website of the US Treasury Department
The joint statement undoubtedly brings a glimmer of light to the crypto market, and the Stablecoins are back on track. The USDC is up 4.2% in 24 hours, and is now offering about $0.98; DAI rose 4.3% in 24 hours, and is now offering about $0.99; Frax rose 4.1% in 24 hours and is now offering about $0.98. Bitcoin and Ethereum rose by more than 9% in 24 hours, and the total market value of the crypto market returned to $1 trillion.
Top-6 Stablecoin performances by market value - source: coingecko
The Market Trend is Unclear Due to the Frequent Actions of Various Groups
By the time of writing on the 13th:
According to the report of PANews, the stock market of the First Republic Bank of America fell more than 60% before the opening of the session;
HSBC UK acquired the UK subsidiary of Silicon Valley Bank at a price of GBP 1;
JPMorgan Chase, PNC, Morgan Stanley, and other large banks and companies negotiated the purchase of SVB Group, excluding the assets of Silicon Valley Bank.
While we are struggling to deal with the panic of bank failure, important data information still needs to be followed. The United States will release the February CPI value and core inflation annual rate on Tuesday.
The current interest rate is between 4.5% and 4.75%, the highest level since October 2007. Meanwhile, according to the data released by the US Department of Labor on February 14, the US CPI in January was 6.4%, far higher than the 2% expected by the Federal Reserve. With regard to the value published tomorrow, the market forecast value is 6% (CPI value) and 5.5% (annual rate of core inflation). After the value is published tomorrow, the interest rate of the Federal Reserve meeting on March 22 will be determined.
