Cryptogram - 10MAR2023

Bitcoin below 20k again 😭 What's ahead?

10 March 2023

The newsletter is put together by Giottus Crypto Platform and The News Minute’s Brand Studio. You can read all the previous issues of Cryptogram

.

Was this newsletter forwarded to you?

Hello!

Some of us thought the pain will be over with FTX, Gemini, Genesis and all of them, but we were wrong. As boring as its death was, Silvergate sure has plunged crypto markets into further darkness. Yep…

Some are asking, is Binance next? Sure, why not, we should be prepared for anything now. That sounds dire, but that is the kind of preparedness we think you should have at this point, and we have our reasons. That’s what our main article is about in this issue, so read on. 

Before that, here are our Top 5 stories for the issue:

1

India’s Finance Ministry has

. Crypto exchanges and firms will now have to comply with tighter regulations. 

And you know what…

2

3

Coinbase launches Wallet-as-a-Service,

, making it a lot easier for companies to be onboarded into Web3.

4

Reuters

that JP Morgan is ending its relationship with Gemini. Gemini

it.

5

Amazon working on allowing customers to purchase NFTs tied to real-world assets. This means NFTs will be integrated into Amazon’s mainstream commerce, a big jump from its earlier plans of launching a separate NFT platform.

 WEEKLY MACROS

Total crypto market cap: $0.97 trillion - 

 11.8%

Bitcoin market cap: $414 billion -

 8%

The dollar index (DXY): 105.2 -

 0.6%

Bitcoin Dominance: 40.07% - 

 0.7%

Crypto Fear and Greed Index:

34

- The market is fearful amid crackdowns on crypto firms like Kucoin and multiple bank runs like Silvergate, and Silicon valley bank.

 WEEKLY PRICE TRACKER

Price movements from last Friday

BTC Watch

 10.6% as the entire crypto market reacts to crashing of crypto bank Silvergate and filing of a lawsuit against crypto exchange Kucoin

ETH Watch

 9.5% as New York attorney labels ETH as a security amid Silvergate crash

Altcoins Watch

STX

:

 32% with STX cooling down after its meteoric rise post the launch of ordinal protocol.

KAVA

:

 10% as the Kava DAO has voted to allocate $750M to on-chain incentives aiming to onboard the best developers onto the layer-1.

MATIC

: 

 13% with critical support at $1 giving the bulls a chance to hold the level amid bearish waters

 WHAT'S HOT

  Coins to watch out for

Huobi Token (HT)

- Huobi, the 17th largest crypto exchange, has seen its native token collapse by 90% in a flash crash. Some speculated that the downturn has more to do with broader negative market sentiment. However a flash crash of this size has raised some concerns among the market participants. 

Ordinal Doge (oDOGE)

- Ordinal Dogecoin, touted as the first-ever real memecoin on the Bitcoin blockchain has successfully acquired Ordinal Inscription #5768, the true first-ever DOGE on Bitcoin, in an OTC trade for the value of 10BTC in $oDOGE tokens. Though the fundamentals are lacking in this project and investment can be highly risky, it is worth to keep an eye on it.

Project to watch out for

Scroll

- is a zkEVM-based zkRollup on Ethereum that enables native compatibility for existing Ethereum applications and tools. Scroll has announced that it raised $50 million in its most recent funding round. Scroll’s competitive edge lies in its three core values: community-driven, security first, and decentralization at every level according to its founder. It's a good project to watch out for as mainnet launch is 3-4 months away.

Was this newsletter forwarded to you?

 THE HOT TAKE

Bitcoin below 20k again. What's ahead?

The collapse of Silvergate, a key banking institution supporting crypto exchanges, and the continued aggressive stance by US Fed have led to speculations of a continued bear market for crypto (and overall global financial markets) this year. Investors who remain patient leading into second half of this year will benefit the most.

Today, we track key trends that points us to more pain ahead for Bitcoin enthusiasts. 

1. Silvergate has collapsed, largest bank to collapse in the US since 2009

Since 2014, Silvergate Capital Corp has been the main banking institution that has supported crypto ramps (converting US Dollar to crypto and vice versa). At its peak, it supported nearly 1,600 crypto exchanges, financial institutions, hedge funds, and others. The collapse of FTX that led to steep withdrawals from the bank has created a bank-run situation that eventually led to its demise.

Silvergate’s stock price in the last 6 months:

Source: Financial Times

This has created new uncertainty among crypto exchanges and investors as other US banks continue to remain wary of crypto partnerships. Also, this is likely to lead into more regulatory scrutiny on banks’ exposure to crypto overall. Global stock indices and Bitcoin (naturally) have dropped significantly since.

2. US Fed intensifies fights inflation which may not have peaked

The US Fed gave indications this week that future interest rate hikes can go higher this year in order to fight inflation. Having increased interest rates by 25 bps in the last round, there is a high likelihood of a 50 bps rate hike this month (62%) according to economist consensus. This implies that softening of the Fed’s stance is still months away. This maybe in preparation for an impending recession in the US – if this happens, risk-on assets like crypto will lose a lot of value quickly.

3. The US Dollar is regaining strength

DXY, the US dollar index, is regaining some lost ground this month. From its local highs in Oct-Nov, it has been on a downtrend which led to a rally in Bitcoin early this year. Now, this trend has reversed and likely continue as interest rates remain high. As investors get good returns on US dollar deposits across the world, risk-on assets will see an outflow of capital in the short term.

4. Bitcoin whales have been preparing for a dump

We can’t fight the whales but we can keenly observe their moves. The number of address with more than 1,000 BTC have been reducing since the start of this year. This points to a preparation for a quick dump on exchanges (which may be happening today).

What can you, the investor, do in these testing times?

Preserve and grow your capital:

Don’t deploy all your cash into crypto yet. Use DCA approach to gain positions but wait for an eventual low in the markets before you deploy them all. Markets are likely to regain strength post June-July this year. When possible, gain some value via US Dollar deposits in the interim.

When you buy, buy Bitcoin:

Outside stablecoins, BTC remains the only way to preserve your positions in case of a recession in the US which will affect all markets. Altcoins will likely bleed more.

That’s it for this issue, see you next week.

If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.

Was this newsletter forwarded to you?