Global Markets React to Binance's Legal Woes, Ripple Rallies On Imminent SEC Decision, EU Inflation Takes Center Stage

March 28, 2023. The global crypto market will be mixed today, as investors digest the past weeks’ turbulence in the global banking sector, according to ATTMO, a weather-inspired crypto AI forecasting tool. Both  Bitcoin (BTC) and Ripple (XRP) have upside potential while Ethereum (ETD), Litecoin (LTC) and Cardano (ADA) face a downside risk.

Over a one-week horizon, an imminent market correction is however likely for both major cryptocurrencies –  Bitcoin and Ethereum, ATTMO data shows. They have gained 63 percent and 44 percent respectively since the beginning of the year, so profit-taking is likely. As for Ripple, it trades in a drawn-out bull market with an imminent market correction looming. 

Binance drops on yet another US court case

Binance fell more than 5 percent yesterday as the US Commodity Futures Trading Commission (CFTC) sued the crypto exchange and its CEO Changpeng Zhao (known as CZ) claiming they violate the country’s derivates trading rules.

“At Binance, we look for amicable solutions to all problems. We are collaborative with regulators and government agencies all around the world. While we are not perfect, we hold ourselves to a high standard, often higher than what existing regulations require. And above all, we believe in doing the right thing by our users at all times,” CZ wrote in response to the allegations on Binance’s blog.

Bitcoin may profit from this news as investors sell of Binance and turn to Bitcoin, said the head of strategy and research at Matrixport Markus Thielen on LinkedIn. 

Ripple gains on hopes of imminent SEC ruling

Ripple put on 7 percent yesterday on rumors that it will be able to settle an ongoing court case with the US Securities and Exchange Commission (SEC) as early as this week. The case has been dragging on since 2020. 

The SEC claims that XRP is a security and falls under SEC’s jurisdiction rules. Ripple claims its products are commodities, which fall under the jurisdiction of the Commodity Futures Trading Commissions. The judge’s ruling will end the regulatory uncertainty surrounding which crypto assets are traded in the US and is set to have a wide-ranging impact on the entire crypto universe. 

”This case may set a precedent that could impact not only the digital asset industry but also the capital markets," the founder and CEO of the Chamber of Digital Commerce, Perianne Boring, said in a statement to FOX Business. 

Ripple is expected to rally if it wins the court case versus the SEC. 

“XRP has the most attractive risk/reward ratio IMO [in my opinion]. The Judge’s ruling is coming down w/in the next few weeks (maybe this week). If the SEC wins, what’s the downside from .45? Ripple appeals and we get the status quo. Ripple wins and it's made clear XRP isn’t a security? Upside?”, John E. Deaton, the founder of Crypto-Law.us tweeted yesterday. He represents nearly 80,000 Ripple holders.   

The two major cryptocurrencies Bitcoin and Ethereum currently oscillate at nine-month highs, both dropping more than 3 percent during yesterday’s session as investors consolidated their gains. 

EU inflation in focus

Investors will focus on the latest euro area inflation figures when these are released on Friday. Year-on-year, the euro area’s March inflation is set to slow by 7.2 percent, according to the analyst consensus. Core inflation is, however, seen edging higher to 5.7 percent year-on-year. These figures will indicate whether the European Central Bank (ECB) will continue to raise its key rate at its upcoming meeting on May 4. 

Last week, the ECB’s head Christine Lagarde reiterated that further rate hikes were looming if the inflation rates do not slow. The euro area’s inflation reached 8.5 percent in February, far above the ECB’s 2 percent target. 

Critics argue that continued rate hikes will have a negative impact on the European economies, which reel from the ongoing uncertainty in the banking sector. Some analysts fear additional bank failures if rates keep rising. Rising interest rates make riskier assets such as cryptocurrencies less attractive to hold, as investors can hold less risky assets such as bonds with a higher return.

DISCLAIMER
These forecasts are not trading advice; they are only decision-support tools. They do not include information that is specific to the user; in particular, they do not account for their personal risk appetite or market assessment.