Crypto-protective reaction – Newspaper Kommersant No. 47 (7492) dated 03/21/2023
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Bitcoin quotes have updated the maximum since June 2022, the ether is near the maximum values since September. The bullish game is taking place against the backdrop of turbulence in the financial system of the US and Europe. Cryptocurrencies are traditionally viewed as protective on a par with gold and US debt securities. Taking into account the large-scale injections into the financial system by the regulators, market participants expect continued growth of quotations.
According to CoinMarketCap, on March 20, the price of bitcoin (BTC) exceeded $28.4 thousand, having updated the maximum since June 2022. Weekly growth was more than 18%, and capitalization exceeded $540 billion. This is the second wave of growth since mid-March (see “Kommersant” dated March 13). However, not all popular cryptocurrencies followed the dynamics of Bitcoin. So, Ethereum, BNB, Solana, Polkadot added 3-12% in price over the week, while Cardano, Polygon, Shiba Inu lost 3-4%.
The continued interest in cryptocurrencies is fueling the banking crisis, especially the recent collapse of US banks that have dominated this market. In particular, USDC stablecoin assets were stored in Silicon Valley BankA Signature Bank provided the Signet payment system, which made it possible to exchange money from fiat to crypto and vice versa around the clock.
According to the agency Reuters, the US authorities want to sell these banks on the condition that in the future they will not interact with cryptocurrency. Representatives of the US Congress also spoke out for tightening the use of cryptocurrencies, in particular, at the beginning of the year, a subcommittee was created there to deal with digital assets.
Jerome Powell the head of the Fed, at a meeting of the US Senate Banking Committee on March 7:
Stronger-than-expected macroeconomic data suggests that the final level of interest rates will be higher than previously thought.
However, so far the identified problems in banks have not had a strong impact on the market. Moreover, the collapse of these organizations, according to Alexander Mamasidikov, CEO and co-founder of Mineplex Digital Banking, provoked a classic bank run – capital flight from banks to other assets. And at the next meeting, the Fed promised to help banks with liquidity.
“Under such conditions, some investors directed their capital to buy bitcoins as one of the alternative means of saving,” notes Mr. Mamasidikov.
Among the protective assets, investors also consider gold and US Treasury bonds.
Market participants consider the risks of banning cryptocurrencies to be very low. Roman Kaufman, co-founder of Berezka DAO and Weezi, notes that “on July 1, 2023, Hong Kong will become the first jurisdiction where everyone can officially buy cryptocurrency.”
At the same time, bankers and politicians are expected to speak negatively about cryptocurrencies, because they do not want more and more people to prefer digital assets and decentralized financial instruments to banks, said Alisa Tsukanova, Marketing Director of EMCD.
Speaking about the growth potential of bitcoin, it is worth considering a number of factors, says Roman Nekrasov, co-founder of the ENCRY Foundation. Firstly, these are the further actions of the Fed, on the policy of which the behavior of the stock market depends, the movement of which is largely repeated by cryptocurrencies. Secondly, the proximity of halving, that is, reducing the speed of generating new coins while reducing the amount of remuneration to miners. This helps curb cryptocurrency inflation by reducing emissions. The event itself is scheduled only for the spring of 2024. However, it “traditionally launches new coin growth cycles,” Mr. Nekrasov notes. And in front of him, based on the history, bitcoin quotes update the local minimum. According to the expert, this minimum was passed against the backdrop of the collapse of the FTX crypto exchange in November 2022.
As a result, market participants expect continued growth in cryptocurrency quotes in the near future. Mr. Mamasidikov expects that in the next two weeks, bitcoin quotes can test the level of $35 thousand. Ethereum quotes, according to Cryptorg CEO Andrey Podolyan, if bitcoin reaches $30 thousand, they can grow to $2-2.1 thousand.
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