Dear Teroxx Community,
This week we saw a market in digital assets that once again saw major price jumps due to the banking crisis in the US and Europe. Market participants are now hoping for a turnaround in monetary policy due to the liquidity that this has provided, which historically often leads to rising prices.
Weekly overview
As usual, we are also providing detailed videos for those who want to delve deeper into the subject.
Digital Asset News
The sudden collapses of Silvergate Bank, Silicon Valley Bank and Signature Bank in recent days have shown how fragile the traditional financial system is, while the crypto industry is losing its most important access to capital in the US due to these developments.
Observers therefore overwhelmingly agree that the collapse of SVB, similar to that of Silvergate, is due first and foremost to difficult market conditions and poor risk management.
The closure of Signature Bank, meanwhile, was much more controversial, because according to several sources, the bank was not on the verge of insolvency and was able to stabilise its financial situation recently, but the authorities nevertheless took the helm here on Sunday as a precaution.
The collapse of the SVB in turn seems to have a domino effect on the global banking industry. The major bank Credit Suisse, for example, is currently experiencing its very own crisis situation, which is why the Swiss National Bank (SNB) has already had to promise a financial injection of 54 billion US dollars. Now it was announced on Sunday that UBS will take over the bank at an 87% discount.
Representatives of the US deposit insurance fund Federal Deposit Insurance Corporation (FDIC) and the US central bank Federal Reserve (Fed) are to testify at a hearing before the parliamentary Finance Committee dealing with the recent collapse of two major banks.
Chairman Martin Gruenberg is scheduled to appear for the FDIC, while Vice Chairman for Supervision Michael Barr will be called for the Federal Reserve.
“The House Financial Services Committee’s goal is to determine the cause of the failure of Silicon Valley Bank and Signature Bank,” Waters and McHenry state. And further: “This hearing will help us understand how and why these banks failed.” Barr plans to soon submit a report on the Fed’s oversight and regulation of Silicon Valley Bank for transparency reasons. In addition, the US Department of Justice and the US Securities and Exchange Commission (SEC) have also announced that they will launch their own investigations. This makes it clear how seriously and apparently unprepared these issues have hit the USA. An expansion of the banking crisis and a domino effect must be prevented if the existing system is not to suffer elementary damage. This uncertainty and the loss of confidence in the traditional banking system are currently a catalyst for digital assets!
Bitcoin is getting new momentum from the US central bank’s cash injection and, thanks to the changed situation, could also find its way back on track in the long term, climbing to a nine-month high! The catalyst for this upswing comes from the US Federal Reserve, which is set to provide a cash injection of almost $300 billion to the domestic industry in response to the looming banking crisis in the United States.
This effectively undoes the central bank’s months of austerity measures through Quantitative Tightening (QT), leading experts to believe that Quantitative Easing (QE) will be back.
“They will say this is not easing, but the numbers don’t lie. Almost half of the drawdown over a year has now been rebuilt in a week,” as analyst Scott Melker, notes.
Unsurprisingly, Bitcoin may follow suit with the stock market, which had already performed strongly the day before, as such conditions are considered beneficial for risky financial products.
For this reason, observers are optimistic that the upward trend could still continue, although the stock market has already moved sideways again.
This week, the FED will announce the further interest rate steps and will presumably thereby decide this week’s development on the markets.
Thought of the week
The current banking crisis impressively illustrates that the financial system is very fragile and vulnerable. However, governments and central banks (US & EU) are currently providing complete “deposit protection” for investors, which makes a mockery of any risk management protection on the part of the bank and any common sense about how an institution should handle money. Moreover, it becomes clear that governments are giving banks a “free pass”. Whether they act in a financially sensible way or put their money at “risk” with high-risk speculations suddenly seems to be of no importance, because in an emergency they will be helped so that there is no “crash”. This illustrates that the current financial system needs a drastic overhaul in order to build up a basis of trust and establish it in a credible way, because the current situation should make it clear to everyone that transparency and sustainability are not being used here!
Digital assets, on the other hand, are transparent, publicly viewable and traceable. They could benefit fundamentally and in the long term from this banking crisis if the tightening of the money supply turns into a rapid easing and the key interest rates should fall again sooner than expected. The momentum and confidence base are now definitely in the playing field of digital assets and should be used cautiously but decisively for further positive adaptation and development.
Digital Asset Markt
Bullish outlook: Should the FED move swiftly to ease monetary policy and communicate, $30,000 per bitcoin could be tested.
Bearish outlook: Should the central banks continue to stick to their course and only provide “certain” aid, a market correction could follow this week. Establishing $25,000 as support would then be a strong market sign.
