Further banking turmoil is expected this week as banks and regulators rush to secure the takeover of Credit Suisse by UBS before markets open on Monday. Analysts and investors will be watching closely to see if cryptocurrencies can sustain the market rally amid the Fed’s rate decision.
Will there be more turmoil in the markets?
As the NCAA’s March Madness swept through the US this week, market frenzy reigned in the cryptocurrency world. As you follow on Kriptokoin.com, Bitcoin and Ethereum increased by 35% and 25% respectively, even as the turmoil in the banking sector continued. Some regional banks witnessed double-digit drops in their share prices towards the end of this week. The chaos looks set to continue as regulators and key bank players debate how to avoid contamination. Moreover, all of this will happen with the Fed’s interest rate decision, which is an important macroeconomic event.
The turmoil in the banking industry looks set to continue despite regulators’ confirmation last week that both Silicon Valley Bank and Signature Bank’s depositors are safe. Attention has now turned to other regional banks that may face similar challenges. One of those banks is First Republic, whose shares fell more than 30% on Friday after announcing that several major banks will come together to arrange a bailout for the regional player. The announcement failed to consolidate trust. Meanwhile, a coalition of midsize banks in the US appealed to regulators to extend FDIC insurance to all depositors over the next two years as another measure to boost confidence, according to a report by Bloomberg.
The KBW Nasdaq bank index ended the week down nearly 11%. Investors are likely to experience more turbulence towards the open Monday if regulators fail to restore confidence. On the other side of the pond, Switzerland is preparing to implement emergency measures to accelerate the takeover of Credit Suisse by UBS, according to a report by the Financial Times. So banks and regulators can sign the merger deal before markets open on Monday. All eyes will be on Credit Suisse and the knock-on effect of the news on the markets.
Fed watchers keep watch
Speaking of markets, banking stocks fell, while Bitcoin and Ethereum rose. Analysts and investors will be watching closely to see if cryptocurrencies continue this rally that the Federal Reserve is expected to raise interest rates on Wednesday. On Tuesday, the Federal Reserve will kick off the two-day Federal Open Markets Committee meeting for March. The meeting will end with a press conference to be held on Wednesday and an interest rate decision. Despite the turmoil in the banking sector, the Fed is expected to raise interest rates by 25 basis points, according to economists surveyed by Bloomberg.
“We hope the Bank Term Financing Program will be enough to stop further bank runs and allow them to increase by 25 basis points by suppressing market volatility, at least until next week’s FOMC,” cryptocurrency trading firm QCP Capital said in a market update.
What’s on the cryptocurrency market this week?
One day after the Central Bank’s interest rate decision, a highly anticipated airdrop will take place. Tier 2 scaling solution Arbitrum will airdrop its token on Thursday. Approximately 12.75% of the total token supply will be airdropped to the community. Tokens will be issued to those who have used the network over the past year. Arbitrum developer Offchain Labs worked with crypto data provider Nansen to devise criteria that determine who should receive the airdrop.
The airdrop was announced to allow buyers to nominate themselves as delegates and give the Arbitrum Foundation time to process approvals. Offchain Labs has not contacted any central exchange to list the Arbitrum token. Crypto VCs recently said that at least half of their portfolio companies are delaying their token launches due to headwinds around exchange fees and regulatory concerns. In recent weeks, several high-profile projects such as Arbtitrum and Blur have announced airdrops.
Cryptocurrency investors will follow these events
On Monday, the People’s Bank of China will announce the Lowest Loan Rate. On the same day, the President of the European Central Bank (ECB) will make a speech. On Tuesday, US Existing Home Sales will arrive. Wednesday is the big day: The Fed rate decision will be announced, followed by a speech by Fed Chairman Jerome Powell.
On Thursday, there is the European Leaders’ summit. On the data agenda will be US Building Permits, US Unemployment Benefit Applications. On Friday’s data agenda are the US Core Durable Goods Orders and the US Manufacturing, Services and S&P Global Composite PMI. Finally, on Friday, Fed’s James Bullard will speak.
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