BTC$ is up 28.7% on the week, and is attempting to finish the week above 26k. ETH$ is lagging slightly with a 20% gain. And what a week it has been.
Last weekend, we experienced something no one was expecting: USDC lost its peg.
USDC reached a low of $0.8776 on Saturday. It is now returned to trading in the $1 range.
The issuer of USDC declared that the $3.3bn backing its $40bn stablecoin were stuck at Silicon Valley Bank, causing justified panic.
While still the 5th largest coin, USDC lost 15% of its market cap due to this event. The notorious USDT is now trading around 30 bps above parity, and keeps proving its haters wrong by gaining market share.
So, due to the FUD, people switched USDC to ETH (this is the easiest trade to reduce USDC exposure). As a result, ETH outperformed BTC over the weekend. ETHBTC reached 0.0734 on Sunday night, but has been declining rapidly since. It is currently at 0.066.
Circle was quick to announce over the weekend that they would continue redemptions at 1:1 on Monday, and would cover the lost reserves through their own stack of cash should SVB’s deposit be lost.
Monday could not come soon enough, and to no one’s surprise, the FDIC completed the resolution of SIVB, fully protecting all depositors. USDC returned to peg as a result.
Undoubtebly, fear caused countless of other regional banks’ stocks to plummet. Read Matteo Bottacini’s TA Tuesday on how banks have mismanaged their books.
And then it was BTC’s time to shine, as the bank contagion started in the US.
I believe the BTC outperformance comes as a direct result. People have started to lose trust in banks, and BTC is seen as digital gold, and a hedge against our careless monetary policy. Bitcoin Maxis have been waiting for such a moment for a while.
BTC dominance is at the highest point since June of last year. Back then, we also saw flight to safety, but in a different form. Last May, Terra Luna collapsed, and as a result, people fled from altcoins to bitcoin.
Now, when will the time come for altcoins to catch up? If we continue in these uncertain macro conditions, BTC will continue to live by its narrative and should continue to gain dominance over altcoins. Most altcoins simply have too much downside risk until the economy figures out which way it is going. This may be revealed next week, when Mr. Powell gives some insight on whether the Fed got ahead of itself, or if the market is currently far too optimistic.
As we have done in the past, a deep dive on the failure of traditional banks and the impact this has had on digital assets will be released next week.
Do not hesitate to reach out to our trading team if you have any questions.
Some last points…
Yesterday, Ethereum developers announced the target date of April 12 for the long-awaited Shanghai hard fork.
And the airdrop that I and many other DeFi Degens have been patiently waiting for was announced yesterday. Arbitrum will be releasing its token, ARB, to its community members on March 23. All you need to know about this is in this thread.
Read more News here.