Market Deep Dive: BTC remains strong despite regulatory news and macroeconomic events

There is much to discuss this week, as regulatory news and significant macroeconomic occurrences have once again taken centre stage.

Nevertheless, BTC was strong, and slowly ETH is catching up. On Wednesday, BTC$ reached a new local high just above 28.9k before dropping to 26.6k after the FOMC meeting. Yesterday, ETH$ outpaced BTC$ in the recovery to reach local highs of 1.86k.

A key development this week was the SEC threatening to sue Coinbase over certain crypto products. Coinbase is clearly upset, responding in a blog post titled “We asked the SEC for reasonable crypto rules for Americans. We got legal threats instead.” You can read the full blog and Tl:dr published by Coinbase here.

The SEC issued a Wells notice to Coinbase regarding potential securities law violations concerning some of its listed digital assets: Coinbase Earn, Coinbase Prime, and Coinbase Wallet. Despite the notice, Coinbase’s products and services remain unaffected. The SEC has not provided specific information on the potential violations, and Coinbase has unsuccessfully sought clarification on which assets may be considered securities. Coinbase claims they have attempted to engage with the SEC on registration, and has asked for guidance on crypto regulations, but unfortunately the SEC’s lack of feedback and inconsistency with other regulators, such as the CTTFC, has led to confusion within the crypto industry.

Further complicating the regulatory landscape, Tron Founder, Justin Sun, was hit by a lawsuit filed by the SEC on charges of securities market manipulation. The SEC alleges that Sun and his associates created an extensive wash trading programme to boost their trading volume and to claim that TRX and BTT are unregistered securities.

Terraform Labs founder, Do Kwon, was arrested in Montenegro. Federal prosecutors in New York shortly after charged him with conspiracy to defraud, commodities fraud, securities fraud, wire fraud, and conspiracy to engage in market manipulation. The Department of Justice will seek his extradition to the US.

To end the week, the SEC issued an investor alert urging caution around crypto asset securities. It seems like Gensler is slowly running out of ammunition and is firing blank shots.

Turning now to macro events: the Federal FOMC held its meeting on March 22nd. The rate hike of 25 bps was expected, and therefore, Federal Reserve Chair Jerome Powell’s press conference was the main card.

Jerome Powell’s comments on the Silicon Valley Bank collapse ($SIVB):

  • The bank’s management experienced a significant failure.
  • The bank underwent rapid expansion.
  • SVB faced an unparalleled bank run at an unprecedented speed.
  • Powell expresses his intention to advocate for more robust banking regulations.

Powell on interest rates:

  • If we need to raise rates higher than expected, we will.
  • Fed officials do not see rate cuts this year.

Traditional markets seem to be calling Mr. Powell’s bluff. Rate cuts were, and still are, expected this year. S&P 500 and the Nasdaq are up 0.8% and 1.35% this week.


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