The US financial system had another tumultuous week, but crypto significantly outperformed. The Nasdaq Crypto Index (NCI) surged 26.5%—led by Bitcoin's (BTC) remarkable 31.5% price increase—and ether (ETH) rose 16.9%. The Fed announced the $25 billion Bank Term Funding Program (BTFP) to bolster the banking system's health. Later, First Republic Bank received a $30 billion rescue deposit from larger banks, while regional banks borrowed $165 billion from the Fed's discount-window credit line to prevent any additional failures. On Sunday, UBS announced the acquisition of fellow Swiss bank Credit Suisse. Crypto prices continued to climb throughout the weekend on increased investor interest in a banking system alternative/emerging digital store of value and the prospect of more liquidity being injected into the system.
Banks borrow $164.8 billion from Fed in rush to backstop liquidity
According to a Bloomberg article, banks have used over $12 billion of the $25 billion BTFP budget. This could be seen as an effective quantitative easing move, as banks can deposit government debt as collateral for a loan of 100% of face value even if market value is lower. Additionally, over $164.8 billion out of a potential $2 trillion were lent to banks from the Fed’s discount window, the traditional liquidity backstop.
Crypto rallies into weekend, bitcoin posts its best week since early 2021
This move can be interpreted as investors rediscovering an appeal for an alternative banking system, and an emerging digital money that cannot be diluted nor confiscated by a central authority. As traditional banks' opacity and fragility becomes more apparent to the public, Bitcoin’s’ decentralized and transparent nature are increasingly becoming more alluring to the public. The positive price action can also be viewed as a clear response to the increase in liquidity in the system after the Fed announced its BTFP to help banks.
Hashdex rings the opening bell at the New York Stock Exchange
Our team at Hashdex had the honor of ringing the opening bell at the New York Stock Exchange on Wednesday. More information on the event can be found here.
Ethereum’s Shanghai Hard Fork now has official target date
Ethereum's much-anticipated network overhaul, that will activate ETH withdrawals, is finally set to occur on April 12. Although it could lead to short-term selling pressure for ETH, the upgrade is long-term positive for the Ethereum network, as it allows many investors, especially institutional ones, to start engaging with staking, strengthening the overall network security and turning a lot more of the ETH supply illiquid in exchange for an emerging “risk-free rate” in crypto.
Uniswap version 3 goes live on BNB Chain
Uniswap, the most well-known decentralized exchange (DEX) of the decentralized finance (DeFi) ecosystem, had the latest version of its protocol successfully deployed on the BNB Chain, the second smart contracts platform by market capitalization, and the third blockchain in the market by total value locked in DeFi. This follows the deployment of Uniswap on several other smart contracts platforms and Ethereum scaling solutions, helping to integrate the liquidity in the whole of DeFi and unlocking a new frontier for one of the most important DEXs in the market to continue leading the adoption of decentralized financial services.
Visa's crypto strategy remains intact despite crypto winter
Despite rumors Visa was pulling back on its crypto plans, a spokesperson for the payments company told CoinDesk “The recent failures do not change our crypto strategy and focus to serve as a bridge, helping connect both platforms and technologies emerging in the crypto ecosystem.”
What to Watch: All eyes are on Wednesday’s Federal Open Market Committee’s (FOMC) interest rate decision and whether the Fed will have to pause or slow down the financial tightening given the ongoing banking crisis in the US and Europe. Expectations are split between a 25 bps hike or a halt, a huge U-turn compared to the near-certainty of a 50 bps hike only a couple of weeks ago.
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