Crypto weekly update
23. March 2023  • clock 3 min •  Daniel Mitrovsky

Bitcoin Benefits From the Problems of Traditional Banks – Cryptocurrency Market Overview (10.3. – 23.3.)

Over the past two weeks, the total market capitalisation exceeded €1.06 trillion. The increase in market capitalisation over a 14-day period is 13.07%. The price of Bitcoin has risen by 23.9% over the last 14 days to a current value of over €25,400. Bitcoin’s dominance is currently around 46.1%.

Source: Coinmarketcap

Bitcoin Benefits From the Problems of Traditional Banks

The collapse of several US banks, which we reported on in our separate blog post, has caused many retail and institutional investors to look to alternative stores of value to protect their funds. This has been reflected in the prices of assets such as gold and Bitcoin, which have seen huge capital inflows.

After the initial shock regarding the problems of Silicon Valley Bank, in which several crypto firms had funds stored, including the stablecoin issuer USDC Circle, the price of Bitcoin briefly fell below the psychologically important $20,000 threshold. The USDC stablecoin also ran into trouble, momentarily depegging from its peg to the US dollar and dropping to $0.9.

However, it did not take long for bank customers in the US and other parts of the world to realise that their funds weren’t safe in traditional financial institutions. This is grist for the mill for Bitcoin, which has once again taken centre stage due to its decentralised nature and the fact that it allows wealth to be held on its own without the need for a central authority

Since 10 March, demand for Bitcoin has begun to outstrip its supply, reflected in its price surge. To date, the price of Bitcoin has risen by over 40% and is currently trading at $28 200 (€26 100). Bitcoin’s dominance has also increased significantly, rising from 42% to almost 47% over this period, reflecting the fact that capital inflows have been much higher into Bitcoin than into alternative cryptocurrencies.

Amid fears of a possible recession and a loss of confidence in banks, it is Bitcoin, along with traditional gold, that is proving to be a safe haven for those who care about their own money. Source

Ethereum Confirmed the Shanghai Upgrade Date

The developers of the Ethereum network made an announcement over the past week regarding the rollout of the Shanghai-Capella update to the main Ethereum network. The update also referred to as the Ethereum Shanghai Upgrade, is the most significant update to the Ethereum network since September 2022, when the network transitioned to the Proof-of-Stake consensus algorithm.

The most important part of the upcoming upgrade is enabling ETH withdrawals from the deposit staking contract. Since the launch of the Proof-of-Stake-based Beacon Chain back in December 2020, those who deposited their ETH into a contract had to lock their funds indefinitely. Staking on the Ethereum network has so far only been unidirectional, meaning that it was possible to deposit and stake your funds without the ability to withdraw them.

At the Ethereum All Core Developers Execution (ACDE) meetup on 16 March, it was announced that the update would take place on the main Ethereum network on 12 April at 23:27 CET at epoch 6209536.

How this update will affect investors remains questionable for now. It is expected that some investors will realise their profits, and others may move to other forms of Ethereum staking, such as Liquid staking. However, in order to maintain the security and decentralisation of the network, certain restrictions are set to avoid massive withdrawals in the short term that could jeopardise the functioning of the network. Source

Fear and Greed Index in Green Numbers

The Fear & Greed Index, known as the Fear & Greed Index, which focuses on a multi-criteria analysis of current sentiment in the cryptocurrency market, has entered the green zone after almost a year above the 60-point mark and is attacking levels last reached in November 2021.

The growth of renewed interest in cryptocurrencies, and Bitcoin especially, is clearly driven by its remarkable resilience in the face of global economic issues affecting the behaviour and decision-making of investors worldwide.

On Tuesday, 21 March, the index reached the greed zone at 68 points out of 100. The last time the index reached this level was in mid-November 2021, just days after Bitcoin reached its all-time high of nearly $70,000.

It is currently in “greed” territory, pointing at 66. The last time the index reached this mark was in mid-November 2021, a few days after bitcoin reached its all-time high price of nearly $70,000.

Seeing the index in the greed zone seems like an illusion after its values were mostly in the extreme fear zone during 2022. This, too, confirms the change in market sentiment and that more and more investors see Bitcoin not just as speculation but as a regular tool to protect their funds in uncertain times. You can read in detail about what the Fear & Greed Index is and how it works at this link.

Is Microsoft Developing Its Own Crypto Wallet?

Microsoft is far from the only one of the world’s leading institutions that has made no secret of the fact that it has been exploring and experimenting with blockchain technology for several years.

Last week, screenshots began circulating on the social network Twitter from a user named Albacore, who poses as a pseudonymous software researcher from Central Europe. Albacore posted photos on Twitter showing that Microsoft has added source code to its Edge browser that integrates a non-custodial wallet directly into Microsoft’s native browser.

The screenshots shared by Albacore show the user interface for the crypto wallet, a decentralised app explorer, an information feed, and the ability to purchase cryptocurrencies through Coinbase and MoonPay. According to him, this crypto wallet-related enhancement is already incorporated into the Microsoft Edge browser, but for now, it is hidden and not accessible to users.

However, according to his words, Microsoft is creating and testing a lot of things that may never see the light of day. Therefore, it is not yet certain whether Microsoft will actually introduce this wallet to all users in the future or if the project will simply bite the dust.

Albacore also adds that Microsoft’s expansion into the cryptocurrency world by creating its own embedded wallet may be an attempt to offer a similar service to that provided by Microsoft’s strong rival Opera, which runs Brave Browser, a privacy-focused browser with built-in Web3 features. Source

The Deadline for Registration in the Mt. Gox Case Is Again Postponed

The registration date for creditors of the bankrupt crypto exchange Mt. Gox has been postponed again for another month. According to the official announcement, the final deadline for creditor registration has been moved from 10 March to 6 April, allowing creditors to register their claims for a month longer.

In addition to the registration date, the start date for redistribution has also been pushed back by a month. Thus, the redistribution of assets to creditors will not start on 30 September, but on 31 October 2023 instead.

The official document outlined various circumstances for pushing back these deadlines, including progress on what choices will be available to creditors when making their selections. Lenders will be able to choose whether they want to collect funds by bank transfer, via cryptocurrencies or in some other form. In total, creditors should receive nearly 138,000 bitcoins, which are calculated to be worth $3.8 billion.

Mt. Gox was a Tokyo-based cryptocurrency exchange through which more than 70% of all bitcoin transactions once passed. In 2014, the exchange was attacked by hackers, and more than 744,000 bitcoins were stolen from it. Paying off creditors from the collapsed exchange has been a hotly debated topic for some time, especially considering that the value of BTC has increased many times over since the exchange collapsed in 2014. There has been speculation about the impact of Mt.Gox’s creditors on the market and how this redistribution may affect the price of Bitcoin should the creditors decide to sell their bitcoins in droves. Source

The Fed Raised the Interest Rate

Despite the banking crisis and high interest rates affecting both consumers and institutions, the Federal Reserve (Fed) has decided to raise interest rates again.

At the March Federal Open Market Committee (FOMC) meeting, held 21-22 March, Fed Chairman Jerome Powell announced a rate hike of 25 basis points. This brought the key interest rate into the 4.75% to 5% range.

After the multi-bank crisis, the Fed’s direction has changed partially. Before the collapse of the three US banking institutions, the Fed wanted to fight fiercely against the still relatively high inflation and planned to raise interest rates by up to 50 basis points. However, the Fed’s rhetoric has been tamed after the incidents, and the Fed will, in all likelihood, have to suspend rate hikes in the coming months to avoid plunging the economy into recession. This plays into the hands of equities and risk assets, including Bitcoin. Source

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Daniel Mitrovsky


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