BTC is currently trading around $19,800 and ETH around $1,400. Notable gainers in the last 24 hours are LEO, PAXG, and ATOM. The global crypto market cap is ~$958B, down ~7.3% over the last day. DeFi Total Value Locked is ~$44b and BTC dominance is around 43%.
Risk assets are continuing their descent lower. The banking sector led a sharp downward reversal in risk sentiment yesterday afternoon. Just one day after Silvergate (SI) announced its liquidation, Silicon Valley Bank (SIVB), a top 20 U.S. bank by assets and a top lender to VC-backed tech darlings, announced it was seeking to raise $2b to offset losses that similarly arose from its asset-liability mismatch in the wake of rising interest rates. SIVB fell ~60% yesterday, taking the broader banking sector lower alongside it. Depositors ran for the exits as reports indicated many VC firms advised their portfolio companies to withdraw their assets, sparking a bank run. SIVB was down another ~60% in pre-market trading before shares were halted for an impending announcement. Shares have yet to open for trading today, and the bank is rumored to be searching for a buyer after failing to raise capital. The news sparked a sharp reduction in risk appetite broadly as fears around bank stability spread.
Adding to the deteriorating sentiment attributed to the banking sector, new crypto regulatory fears emerged yesterday afternoon as the NYAG sued KuCoin for violating securities and commodities laws, alleging that ETH is a security during the process. The allegations come just one day after CFTC Chair Behnam testified under oath that his agency strongly believes ETH to be a commodity, hence its willingness to list Ethereum futures. More than ~$360m of crypto longs were liquidated in the last day amidst the contagion.
On the data front, nonfarm payrolls were hotter than expected again, beating by ~85k jobs. However, average hourly earnings growth came in lower than expected in one positive sign for inflation reduction. Elsewhere, Governor Kuroda maintained the BoJ’s ultra-loose policy stance in his last meeting at the helm of Japan’s central bank. Lastly, it appears the Fed’s next meeting could go either way on a 25 or 50 bp hike. Market implied probabilities have been highly volatile over the past week in the wake of Powell’s congressional testimony, but they currently sit at an even 50 / 50 split.
Notable news includes: The DoJ appealed a New York judge’s decision to approve Voyager’s asset sale to Binance.US; The Fed is setting up a specialized crypto team to help supervise the sector; Gary Gensler authored an op-ed on crypto regulation in The Hill; Huobi’s HT token quickly fell ~93% yesterday before precipitously regaining the losses in an unexplained series of sharp moves, now sitting just ~14% below its pre-crash levels; Blockchain.com suspended operations of its asset management arm; MakerDAO’s founder called for a rebranding of the Dai stablecoin; an NFT buyer swapped 527k Goerli testnet ETH for ~73 ETH which they used to acquire a Cryptopunk; Vitalik’s ‘Gitcoin Presents’ NFT collection took the top spot on OpenSea; and, Starbucks Odyssey released its first limited-edition NFT drop.
Authors:
Matt Kunke, Junior Strategist | Twitter, Telegram, LinkedIn
Brian Rudick, Senior Strategist | Twitter, Telegram, LinkedIn
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