Market Deep Dive: The main story of the week was Silvergate

BTC and ETH were moving in a tight range over the last week until BTC$ and ETH$ fell 6% and 5.5% in just one hour shortly after midnight on Friday. BTC$ is now trading at 22.3k, and ETH$ is at 1.57k.

Important to note for Ethereum: the developers have agreed to schedule the Shanghai upgrade on the final testnet, Goerli, for March 14th. If this is a success, the mainnet launch can be expected to happen during the second week of April.

The main story of the week was Silvergate.

It is one of the few US banks that transacts with crypto exchanges, providing a fiat on and off ramp.

On Wednesday, Silvergate Capital Corporation made a filing with the SEC, indicating it would not be able to file its annual report by the March 16 deadline.

Its losses on its securities portfolio will negatively impact the regulatory capital ratios of the company and its subsidiary, Silvergate Bank. The bank has been selling off its securities in order to meet withdrawals from crypto customers. Its stock opened 45% lower on Thursday.

Coinbase announced yesterday that they will no longer accept payments via Silvergate Bank. We expect more will follow, switching to alternative settlement methods, such as Signature.

The crypto market reacted rather late to the news. The sharp drop Thursday night triggered $200m in long liquidations across the market, which is the second highest this year.

The strong dollar and rising treasury yields are not helping the crypto market either.

The DXY has been pushing since the beginning of February, trying to break the 105 resistance and create a new higher high.

The 10-year treasury yield passed 4% on Thursday, the first time since November. While the 2-year treasury yield, now at 4.88%, is at its highest level since 2007, the market is now expecting a 25 bp hike in each of the next three FOMC meetings, with the likelihood of a 4th 25 bp hike changing day to day.

Next week, we are once again expecting the release of employment and payroll figures, with the FOMC meeting taking place the following week (March 22nd). This event will likely set the stage for the rest of the year, solidifying the Fed’s stance on the terminal rate in 2023.

Despite this, the crypto market is holding up pretty well. However, if this trend continues, BTC retesting 20k should be around the corner.

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