Weekly Update March 13th

Bitcoin and Crypto Market Updates (March 13th)

What happened over the weekend? What’s next?

So the Fed has come out and backstopped the deposits at all of these risky smaller banks. They have also opened a ‘’discount window’’ to allow these banks to shuffle the balance sheet to remove/reduce the risk.

As such many are viewing this as some type of Pivot and believe the Fed can’t move rates higher here without blowing more up. Chances of a Fed hike in march have flipped to 10% now pricing in a pause and 90% now expecting a 25. A wild swing from the majority thinking a 50 was coming.

We also had a signature bank collapse — crypto’s last and final major payment rail for big money.

So in one foul swoop the Fed has stemmed the risk for depositors with these banks, provided some level of stability and raped crypto one final time. If you can’t laugh about it then your gonna cry.

So the big question… Is this a renewed Fed-driven bull market or the start of something more sinister?

Holding your nerve will pay here. I imagine many have FOMO’d into the market not fully understanding the bigger picture. Especially when you have tweets like this from Arthur Hayes… Cman bro, that’s just irresponsible.

I think many are missing a critical component here. So bank’s depositors are going to get bailed out… Great, this is what was needed to prevent a collapse. BUT equity holders and creditors… they are going to get left in the dust. MAX rekt. If you held SBV stock that’s now practically worth 0. So how would you be feeling today if you held a load of stock in these banks? Even with the Feds ‘’bail out’’? Pretty sure you’re going to sell it.

Additionally, another piece missing from people’s thought process is that if these banks have to utilise this discount window from the Fed they are going to be restricted on stock buybacks + will come under greater capital constraints and scrutiny.

I also have a problem with buying here just due to the rationale — So you’re going to FOMO into risk NOW because there are signs of systemic failure? And you think the Fed pivots? Without seeing or giving the market even a full day/week of action?

I compare FOMOing here to buying Do Kwon’s ‘’steady lads’’ tweet. There’s a total loss of control.

Look, I might be wrong… The Fed’s actions over the weekend could have put a floor in the market, CPI might come in really cool tomorrow and it’s up only from here. Maybe. But I want to give this time… I want to see if systemic failure runs deeper… I want to see more signs of inflation coming down.

The other critical thing to watch TODAY / TOMORROW is where does the money go? Does it go into risk on? Or does it flow to inflation protection themes? Or does it flow to recession-based sectors? If it goes anywhere other than risk on there’s more pain…

So my message — Chill, give the market time to digest… then make moves. Don’t fomo into something we don’t fully understand and haven’t seen the effects of yet.

Silicon Valley Bank (SVB) Collapsed in Just 48 Hours

Silicon Valley Bank (SVB) was a well-capitalized institution that served the venture capital community for over 40 years until it was shut down on Friday by regulators, marking the largest US banking failure since the 2008 financial crisis. The downward spiral of the bank began on Wednesday when it revealed that it needed to raise $2.25 billion to shore up its balance sheet. The sudden need for capital sparked another wave of deposit withdrawals on Thursday as VCs instructed their portfolio companies to move funds. Customers withdrew a staggering $42 billion of deposits by the end of Thursday, and the bank was unable to scrounge enough collateral from other sources. Even insured deposits are expected to be available only as early as Monday, and the lion’s share of deposits held by SVB were uninsured, making it unclear when they will be freed up.

USDC Depegs from $1 Amid Panic

The collapse of Silicon Valley Bank (SVB) caused chaos in the cryptocurrency market, resulting in the USDC stablecoin’s price dropping to $0.869 from $1, and MakerDAO’s DAI also depegging from $1. USDT spiked to $1.06 on Kraken, while Bitcoin rose above $20,000. The collapse of SVB, which had ties to crypto, forced regulators to shut down the bank amid a run on its funds. USDC has largely since recovered but emphasizes the fragility around the less-than-stable stablecoins

User Swapped $2 Million USDC for $0.05 in USDT

Ok last one on the topic, but this one is crazy. One unfortunate user swapped over $ 2 million in USDC and received just $0.05 USDT in return. After making the trade on KyberSwap, high slippage and incredibly low liquidity led to the loss of $ 2 million instantly with no way to undo the transaction. In what can only be described as a panic fuelled mistake, the user failed to set the slippage and did not recognise the lack of liquidity which led to the loss. On the other side of the trade, one lucky MEV bot made $2.045 million in profit by executing the trade.

Amazon NFTs Will be Tied to Real-world Assets & Possible Token

Amazon is reportedly planning to allow customers to purchase NFTs (non-fungible tokens) tied to physical goods that are delivered to their doorstep. The company is expected to notify every Amazon Prime customer in the US once the digital collectables initiative goes live, which is rumoured to be by May at the latest. Amazon is considering sending out an email blast to every US-based Prime subscriber to spread the word about its digital collectables push. The back-end blockchain technology is unclear, but the company has reportedly hired or partnered with dozens of Web3-oriented developers to work on the project. The intention is to create some type of private blockchain, and it is unclear whether an Amazon token would be part of the deal. Lot’s of ‘potentially’ and ‘reportedly’ in this one, but it definitely seems as if Amazon are ramping up their Web3 efforts

Binance Converting $1 Billion BUSD to BTC, ETH and BNB

Binance, converted $1 billion from its Industry Recovery Initiative funds to native crypto assets, specifically bitcoin, ether, and BNB. The cryptocurrencies will be purchased using the exchange’s dollar-pegged stablecoin, BUSD. The move comes as the New York Department of Financial Services seized the last crypto-friendly bank, Signature Bank, over the weekend, cutting off the crypto industry from banks in the US. After completing the transaction the binance said on Twitter: “The transfer txid. Took 15 seconds and costs $1.29. Imagine moving $980 million through a bank before banking hours on a Monday.”

Getting the Right Trading Mindset

Crypto trading has gained immense popularity in recent years, with traders constantly looking for ways to profit from the volatility of digital assets. To make informed decisions about when to buy or sell cryptocurrencies, many traders turn to technical analysis.

Technical analysis involves analyzing price charts and market data to identify patterns and trends. The aim is to use historical price and volume data to predict future price movements. Technical analysis is particularly crucial in trading cryptos due to the market’s high volatility and frequent price swings. A trader who relies solely on fundamental analysis, which examines the underlying value of an asset, may miss out on opportunities to profit from short-term price movements.

Fibonacci retracements are one of the most popular technical analysis tools used in crypto trading. The tool is based on the Fibonacci sequence, a series of numbers where each number is the sum of the two preceding numbers. Traders use the Fibs to identify levels of support and resistance in the market. These levels represent potential entry and exit points.

Another widely used tool in technical analysis is the Moving Average (MA). MAs are lines that track the average price of an asset over a set period of time. Traders use MAs to identify trends; just like fibs, it’s possible to extract potential entry and exit points.

Some traders use pattern recognition to identify potential changes in the market. Some of the most common chart patterns used in technical analysis include triangles, head and shoulders, channels and flags. Traders use these patterns to anticipate potential breakouts and trend reversals.

The use of other technical indicators such as Bollinger Bands, Relative Strength Index (RSI), and MACD (Moving Average Convergence Divergence) to identify potential entry and exit points in the market is also quite extended. These indicators help to identify different conditions, which can indicate potential trend reversals.

While technical analysis can be a useful and powerful tool in crypto trading, as traders we should be aware that TA it’s not infallible. Market conditions can change rapidly, and unexpected news or events can cause prices to shift quickly in either direction.

It’s also essential to remember that overreliance on technical analysis can lead to confirmation bias, where you only look for signals that confirm their existing beliefs about the market. This can result in missed opportunities or significant losses.

Technical analysis plays a crucial role in trading by providing valuable insights into price trends and potential entry and exit points. Fibonacci retracements, Moving Averages, chart patterns, and other technical indicators help identify potential opportunities in the market.

However, it’s important to remember that trading is not just about identifying patterns, trends, and potential entry and exit points. To be successful in trading, you must also have the right mindset, execute your trades properly, and manage your risks effectively.

As traders, we should approach trading with a disciplined mindset and a long-term perspective. We should avoid letting emotions dictate our decisions and stick to the trading plan. In addition, a trader should be patient and willing to learn from his mistakes.

Execution is another crucial factor in trading. Even the most well-informed trading decisions can result in losses if the execution is poor.

Finally, risk management is paramount in trading. A trader should always consider the potential risks and rewards of his trades and use stop-loss orders to minimize losses. Additionally, you should diversify your portfolio and avoid putting all your eggs in one basket.

By combining technical analysis with the right mindset, execution, and risk management, the chances of success in the highly volatile world of crypto trading will be greatly increased.