Things get really risky here, as the US Federal Reserve’s move to Silicon Valley Bank (SVB) puts US regulators on the line. This week is significant because of a few things that will occur in the macroeconomic landscape. What awaits Bitcoin and altcoins?
Banking and stablecoin crisis: Summary of the last few weeks
As you follow on Kriptokoin.com, all FUD, starting with the US Securities and Exchange Commission, went after US-based stablecoin issuer Paxos. What followed was the collapse of Silvergate bank after the company decided to get up and leave after a mass exodus of crypto customers.
After the collapse of Silvergate, the fallout reached the widespread Silicon Valley Bank. In addition, the fact that the US-based USDC Stablecoin issuer Circle has $ 3.3 billion in cash reserves in the bank has created confusion in the market. Shortly after, the Federal Deposit Insurance Corporation (FDIC) issued a statement outlining the systemic risks to shutting down Signature Bank. Interestingly, the Bitcoin price fell 10% between March 9 and 10, but more than recouped all the losses in the next two days.
Why is it a bad idea to miss Bitcoin (BTC) when the US CPI is stalled?
The Fed appears to have placed a reversal stop and guaranteed customers a full recovery of funds stuck in these banks. This development caused the crypto markets to prevent further collapses and instead make up for the losses suffered over the weekend.
While the short-term increase looks attractive, investors should note that the US Consumer Price Index (CPI) will be released on March 14. In his latest statement, Fed Chairman Jerome Powell stated that controlling inflation is much more difficult than before. Higher-than-expected CPI figures could trigger a rally for the US dollar, causing risk assets to collapse. Therefore, according to experts, market participants should wait before getting on the hype train.
Un-lock events this week
With the markets in uncertain conditions, altcoins have provided a respite for traders due to their inherent volatility. This week, two major cryptocurrencies will unlock their tokens, the decentralized exchange dYdX and ApeCoin, on March 14 and March 17, respectively.
dYdX will issue 6.52 million tokens worth approximately 14 million. 2.8 million will go to trade rewards and 2.5 million will go towards community treasury. The remaining 115,000 tokens will be distributed among liquidity providers as rewards. Despite this large-scale unlocking, roughly 1.7 billion, or 79% of the tokens, will remain locked.
As for ApeCoin, roughly 40.6 million APE tokens worth $175 million will fill the markets in three days. Of this, 4.1 million will go to Yuga Labs, and 2.2 million will be sent to the Yuga Labs founders.
Bitcoin traders need to grasp this.
Crypto analyst Filip L takes a recent X-ray of Bitcoin. Bitcoin price has risen sharply and erased almost all negative price action from the past week in a single trading session. With the European and US trading sessions still to come, the bulls may be under the wrong impression that this rally has a long way to go. But that’s not the case for me, because the Fed and the US Treasury quickly found a solution before Monday, giving them the opportunity to still raise rates this month.
Therefore, BTC needs to price these increases based on price action. This means that all earnings from this Monday morning should be cleared. It fits the technical analysis perfectly as the 55-day Simple Moving Average (SMA) at $22,800 acts as a solid border on the upside. At the 200-day SMA, it is possible for BTC to bounce back towards $20,000 and touch a bottom around $19,725.
BTC 4-hour chartA small lower leg seems inevitable. With the Relative Strength Index (RSI) breaking the overbought barrier, there is absolutely not much upside potential left. Some support around $21,969 is likely to come in, which has a superior technical performance from the past. A pause there could help for a higher pop this week, which could help BTC rise above $22,800 to $23,878.
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