🗓💊 Crypto Banking Implosion Catastrophe
Weekly Alpha Leak - March 4th-10th - Weekly Synopsis, Insights, Data & Highlights
Theo Delarosa
March 10, 2023
Today’s newsletter is 1839 words, a cool 7 minute read.
It's one thing after another...
In the past week:
- Silvergate and Silicon Valley Bank down
- NY alleges ETH is a security
- More SEC enforcement
- 3AC co-founders rebranding Coinflex to OPNX
- Biden crypto tax increases
And just like that risk shifts off
This week we’re looking at:
- 🗓 Weekly Synopsis
- 📊 Market Update
- 📈 Charts You Need to Be Paying Attention To
- 🚨 Narratives Update
- ✅ Top Crypto Highlights of the Week
- 📝 Good Tweets
📷 Weekly Synopsis
Risk appetite across the board is down and the crypto market is struggling!
We’re being battered down due to various reasons such as ETH being designated a security in a lawsuit against KuCoin, Silvergate and Silicon Valley Bank fallout, hawkish comments from US Federal Reserve Chair Jerome Powell on the course for the economy over the next several months and a general tense situation in regards to the SEC and regulatory environment.
Who will be next in the crosshairs? All of this hullabaloo combined to drag Bitcoin down below $20k and ETH to low $1400.
While crypto had a strong start to 2023, we’ve since given back those gains and the sentiment has shifted considerably. At this point in time, it’s looking like that might’ve been all the echo bubble we’ll get this year.
Too many macro forces are combining against us right now. What we need is time for things to resolve.
Why should we care about the macro here in crypto?
Simple, the concept of risk. Market participants jump into the market when their risk appetite is high and exit the market when their risk appetite is low.
As long as there's uncertainty and variables that make people unsure, we see markets and risk assets such as crypto suffer.
So let’s check-in with some of the recent macro updates from the macroeconomic world this week that are affecting us here in Crypto Land.
Macro check-in:
- SEC Chairman Gary Gensler is cracking down on unregistered securities, with Genesis, Gemini, Kraken and Binance facing charges
- New York is making the bold allegation that ETH is a security
- Collapse of Silvergate and Silicon Valley Bank are bound to bring more regulatory crackdown
- Concern around the Federal Reserve's monetary policy and potential interest rate hikes
- Investor crypto outflows for the fourth week in a row
- The U.S. government's non-farm payrolls report could dictate the Fed's next moves
- Money markets are pricing in higher peaks for central bank rates in the US and EU
- The Fed funds rate is consistent with 3 additional 25 bps hikes, with no rate cuts until 2024
- FOMC meeting on March 22 will include updated Fed Dot Plot and economic projections
- 50 bps interest rate hike probability at over 70%
- Powell recommended that regulated financial institutions exercise caution when engaging with the crypto space
- President Biden's proposed 2024 budget aims to eliminate crypto asset wash trading
- The proposed tax changes could raise up to $24B for the Treasury
- Biden plans to increase taxes for the wealthiest 0.01% to a minimum of 25%, and for individuals making more than $400,000 a year and corporations
Takeaway and outlook: The market is going to probably stay subdued for the rest of this year while the uncertainty clears up and risk on sentiment begins to return to the market.
We’ll want to be on the lookout for larger blowups that could drag prices.
📊 Market Update
Crypto Market Cap: $933.85B, down from last week’s $1.028T 📉
Stablecoin Exchange Reserves: $23.504B, up from last week’s $22.702B 📈
Stablecoin Total Market Cap: $135.04B, up from last week’s $134.98B 📈
DeFi TVL: $44.04B, down from last week’s $48.48B 📉
Exchange Volume: $187.96B for the month of March vs $878.42B total in February
Dex Volume: $15.14B for the month of February vs $77.23B total in February
Ethereum NFT Volume: $439.18M for the month of March vs $1.62B total in February
📈 Important Charts - Total Stablecoins Market Cap
This has been grinding down since May, 2022 where it topped at ~$188B down to its current $134.99B. Stablecoins are the lifeblood of crypto. This symbolizes money entering and leaving the crypto ecosystem.
While it’s been grinding downwards gradually, the curious thing is that we’ve seen no omega dump despite all the serious hardcore catastrophic blowups we’ve seen in this space over the past year.
Overall, the market cap has been roughly ranging since June 2022 when Terra, 3AC, Celsius collapsed and wasn’t impacted again quite so heavily during the FTX implosion.
🚨 Narratives Update
Coin of the Week - Blur Week 3 - 🪂 Airdrop Postmortem
Hoooooooo-boy. Blur was the hottest trending coin a few weeks ago. Everyone was talking about Blur’s wild NFT volume and how it was the hottest new thing revolutionizing NFTFi.
Now it’s fallen to .45 cents from a high of $1.39. So what happened?
Simple. Airdrop farmers. Blur was one of the most heavily farmed airdrops - we can see that via the crazy amount of wash trading Blur experienced by whales.
This chart should clearly tell you one thing - people are selling. We’re in a tough market and people had free money airdropped to them right out of the sky. Why wouldn’t they sell?
Future prediction: Arbitrum (depending on the market conditions it launches in) may see similar behavior to Blur in the beginning.
This also has nothing to say about the underlying tech or future potential, just that crypto is a zero sum game where you do your best to not be the last one out and be left holding the bag.
People are out there making it their business to professionally farm airdrops. Dumps while sellers sell their free tokens are to be expected.
Give those sellers time to do their thing and then we can revisit when buyers are ready to step back into the market. Good luck!
LSDs 📉, AI 📉, ZKs 📉, Chinese Coins 📉
No charts needed. Red and down only the past week. This should serve as a cautionary tale that narratives can pump hard and dump hard. They are stories that we tell ourselves.
We build fundamentals around narratives but at the end of the day, people are in the market to make money. When things look bad, others will dump on you before you can dump on them.
It’s one sick rush to the exit. Keep these in mind though for when the market clears and people are ready to bet on our silly little stories again.
📈 Weekly Gainers:
In times of market bloodshed, it’s a good idea to watch for strength. While the rest of the market is dumping, what is performing well?
Kava stayed up this week and it can be attributed to an ongoing Kava Rise developer incentive program (despite this being a year old).
Here’s a shill thread explaining what’s up.
📉Weekly Losers:
What dumped hardest? Oooof. Some of the recent “hotter” coins such as Blur, AGIX, STX and REN.
STX and REN in particular had been catching a bid as part of the developing BTCFi narrative but when times get tough, market participants puke.
A tale as old as time.
✅ Top Crypto Highlights of the Week
📰 News
- Kucoin sued by New York's Attorney General and alleges ETH is a security
- Silvergate Bank will halt operations and undergo liquidation
- Crypto VCs urge portfolio companies to pull funds from Silicon Valley Bank
- SEC believe Binance.US is operating an unregistered securities exchange
- Binance.US to pay $1.3 billion in an agreement to acquire Voyager’s assets
- U.S. DOJ appeals New York judge’s decision to approve Voyager’s sale to Binance.US
- Coinflex rebranding to Open Exchange (OPNX), 3AC co-founder’s latest crypto venture
- Mt. Gox registration and repayment deadlines postponed to April 6
- Bankrupt Mt. Gox’s largest creditor, Mt Gox Investment Fund, plans to keep returned Bitcoin
- Biden's proposed budget to include closing tax loss harvesting and double capital gains
- Singapore police commenced an investigation into Do Kwon's Terraform Labs
- Swiss bank Sygnum is seeing an increase client inquiries in light of Silvergate’s troubles
- SEC shuts down investment adviser BKCoin Management in $100M crypto fraud scheme
- SEC accuses Utah-based Green United of running $18M crypto mining scam
- Only nine crypto firms have attained some kind of registration with the SEC
- Gemini refutes claim JPMorgan is ending banking relationship
- Amazon to launch NFT platform on April 24
- Meta is working on a decentralized text-based app codenamed P92
- Starbucks first premium NFTs - The Siren Collection: 2,000 NFTs will be sold for $100
- Elon Musk has ambitions of making Twitter the world’s biggest financial institution
- Kraken plans to launch its own bank despite a challenging regulatory environment
- Tether denies WSJ allegations of falsified bank documents
- FTX sues Grayscale and DCG, citing exorbitant management fees violated its trust agreements
- Bybit introduces Mastercard-powered debit card after halting USD transfers
- Circle made the decision to stop processing ACH payments for all of its partner companies
- Grayscale appears to win opening salvo in Bitcoin ETF case vs SEC
- Jack Dorsey's Block soliciting developer feedback for a bitcoin mining development kit
🆕 Project Updates
- Scroll, an Ethereum L2 network that uses zk-rollups technology, raised $50M
- New Uniswap wallet not available in Apple's App Store
- Base integrates Chainlink for off-chain price feeds
- 10k Yuga Labs Otherdeed NFT holders to participate in 2nd gamified test of Otherside platform
- ConsenSys opening its EVM-equivalent zkEVM rollup to public testnet on March 28th
- Coinbase introduces Wallet-as-a-Service product to simplify web3 onboarding
- Coinbase’s Base will likely feature transaction monitoring and AML measures
- Shibarium blockchain to release its beta version for the layer 2 network this week
- Binance NFT Marketplace now supports Polygon Network
- MakerDAO proposes additional $750M U.S. Treasury purchase
- Esports org TSM building its own crypto subnet on Avalanche
- Yuga Labs’ TwelveFold Bitcoin NFTs draws criticism for auction model
- Immutable reportedly trying to sell a certain amount of its IMX tokens to private investors
- There is no Dune Token, there are no plans for a Dune token and there is no Airdrop
- Cosmos approved proposal to launch v9-Lambda to establish first version of interchain security
- The Sandbox is releasing 2,333 Gordon Ramsay avatars players can use as their digital identity
📝 Good Tweets
Genevieve Roch-Decter giving an explainer on the Silicon Valley Bank trouble
Silicon Valley Bank $SIVB is in trouble.
It sold off a $21 billion bond portfolio for a huge loss to shore up liquidity.
The market is worried and the stock is down 54% today.
Here’s what you should know 🧵
— Genevieve Roch-Decter, CFA (@GRDecter)
Mar 9, 2023
Andrew Kang - ummm, not great?
Contagion stemming from a collapse of Silicon Valley Bank would be 10x of that of FTX given they have $170B of deposits
Never too late to assess the creditworthiness/solvency of your custodians, assets, and counterparties
— Andrew Kang (@Rewkang)
Mar 9, 2023
Arthur Hayes on how we create a crypto native stablecoin
.@silvergatebank just bit the dust. #Stablecoins are under siege. "Dust on Crust" is an essay discussing how we create a #crypto native solution to our current $USD problems.
— Arthur Hayes (@CryptoHayes)
Mar 8, 2023
Zeneca on how ERC-4337 improves usability of Ethereum
ERC-4337 is an order-of-magnitude improvement wrt the usability of Ethereum
Writing this thread to cover:
- What is ERC-4337?
- Practical uses of it
- Additional resourcesLet's dive in 🧵👇
— Zeneca (🔮,🔥) (@Zeneca)
Mar 4, 2023
Stephen Flanders saying maybe some people should consider getting a job…
5 reasons why young people should work in crypto:
(+ how to get started)
🧵
— Stephen Flanders (@SteveFlanders22)
Aug 13, 2022