Total Crypto Market Cap
Last week, Bitcoin struggled to make a clear break back to its February highs, spending the majority of the time trading flat. With the exception of a significant negative response to the PCE announcement last Friday and the Silvergate drama playing out on Thursday, the market only experienced tiny daily price moves during the week.
Despite a brief but severe sell-off in stocks, Bitcoin was able to maintain its typical range as the correlation between equity and cryptocurrency remains low. The S&P 500 plunged as low as 3,925 points last week before it was able to recover after breaking below the crucial 4,000 threshold, yet Bitcoin scarcely responded to the instability in stocks.
Crypto-specific events seem to be driving the market even if cryptocurrency continues to decouple from traditional assets this year. Since worries about Silvergate, one of the biggest crypto-friendly banks, have grown, they are thought to be the primary cause of the significant decline in Bitcoin that was observed late on Thursday.
Early this month, Silvergate Bank delayed its SEC filing because of "concerns" over its capacity to continue operating. After that, the company's most important clients rapidly responded negatively. Coinbase, Circle, Paxos, Crypto.com, Gemini, Bitstamp, Bakkt, CBOE, and Galaxy Digital are just a few of the companies that have already left Silvergate for its competitors.
Together with Bitcoin, the larger cryptocurrency sector was in a downward trend due to a lack of potent development drivers. Although falling hard in response to the Silvergate news, the top large caps, Ethereum and Binance Coin, were nevertheless able to outperform BTC on a weekly basis.
The network moved one step closer to Shanghai-Capella by successfully launching the update on the Sepolia testnet, although Ethereum was down -4.7% on the week. Developers now want to launch the Goerli testnet on or around March 14 as the last practice run for the Shanghai hard fork.
Shanghai's final deployment will most likely take place in April, one month later than first anticipated, even if the precise date of the eventual mainnet hard fork has not yet been announced.
Earlier this week, Forbes published a report stating that Binance shifted "$1.8 billion of collateral supposed to support its clients' stablecoins", citing blockchain data from August to early December. As for Binance Coin, it was yet another week of Binance CEO CZ encouraging people to "ignore the FUD".
The other disappointing development was that Coinbase chose to halt trading in Binance USD because to worries about liquidity. The market value of BUSD dropped below $10 billion at this time, reaching its lowest point since July 2021.
Last week, as Bitcoin remained rangebound in the $22,800–23,800 range, the market revised its expectations for interest rates ahead of the FOMC press conference on March 22. The U.S. is the main PCE. Fed speakers' calls for a "higher for longer" terminal interest rate coupled with the preferred inflation gauge coming in higher-than-expected last Friday set a gloomy macro stage for risk-on assets this month.
Prior to FOMC, the ADP employment report on March 8 and the CPI release on March 14 are likely to provide some hints to the market on the Fed's next move. The probability of a 50 basis point rate hike in March jumped to 30% from 0% a month ago, according to the CME FedWatch tool, as a result of the positive employment data and the negative PCE data released so far.
If there were evidence of slowing inflation and the labor market, the Fed may yet decide to raise interest rates by a quarter point. Raphael Bostic, president of the Atlanta Federal Reserve, added this week that he is "firmly" in favor of maintaining the 25 basis point increases. The markets might move in favor of a more dovish conclusion with an increase of 25 basis points.
Illuminating Light From DeFi
For layer-1 blockchain company Casper Labs, which focuses on business and government, last week was a huge one. The business first disclosed a broadened partnership with Google Cloud, which includes moving some of its infrastructure and corporate apps there.
Following the announcement of the agreement, it was revealed that SkyBridge Capital would provide Casper Labs with strategic support. In the future, Casper Labs will receive assistance from the Anthony Scaramucci-led global investment firm in the areas of business development, investor relations, and marketing services.
The native token CSPR ends the week up 12% as the market-wide decline linked to Silvergate negated a significant portion of this week's gains for the asset.
For MakerDAO, the well-known DeFi lending platform, and Dai, the stablecoin issuer, last week was jam-packed with news.
First, the crypto community's response to MakerDAO's proposal to modify its protocol was ambivalent. While there would be some differences, the mechanism would be similar to Terra's disastrous system for backing its UST (currently USTC) stablecoin with its governance token LUNA. As part of its "Endgame" plan, MakerDAO would permit its users to borrow its DAI stablecoin against its MKR governance token (currently LUNC).
Second, MakerDAO has reinstated Aave's capacity to mint the DAI stablecoin, which was disabled after the collapse of cryptocurrency lender CelsiusNetwork last summer.
A $100 million loan to Cogent Bank was ultimately rejected by MakerDAO because 73% of voters were against it. Less than a year after Maker approved a loan to Huntingdon Valley Bank with a comparable arrangement, the decision to refuse the credit was made. This decision hurts Maker's aspirations to draw more traditional businesses to its platform because it may be challenging to rapidly sell off the loan portfolio in the event that the business runs out of liquidity.
Despite all of the worries, the MKR price performance has been excellent. MKR, which increased by 24% last week despite a market sell-off, was the top gainer. Although the rest of the market traded in a range in February, the price of MKR increased by about 40%. The cost of MKR on YTD has also risen by 75%.
After incurring a loss on Thursday, the decentralized derivatives platform Synthetix outperformed the larger crypto market for the week. Even though the procedure didn't receive any major updates this week, it is continuing to gain ground after several weeks of strong momentum.
On February 22, Synthetix released version 3 on the mainnet of Ethereum (ETH) and Optimism. Tradesmen will be able to produce fictitious tokens using v3 that mimic the price of any cryptocurrency or non-crypto asset. The method that only permitted SNX as collateral was replaced with multi-collateral staking as part of the upgrade.
The increase in Synthetix trading volumes since the release of v3 has probably supported the SNX token.
With no current fundamentals to support the token price, yearn.finance is one of the top gainers this week. The token price has surged 45% after the protocol previewed its Ether liquid staking solution on February 24. YFI was up 14% over the previous week.
The Peaks And The Valleys
In February, it was observed that the recurrent pattern of an incredibly fast rise and collapse for tokens signifying a very particular - and typically illiquid - market niche. It's difficult to recall the cryptos associated with either of these fleeting phenomena because the narratives surrounding "AI tokens" and "China coins" disappeared so quickly.
The way down after a quick rise is typically even quicker for tokens rising on announcements of project development than it is for narrative-based tokens.