ATTMO Times – Brighter Forecast for Crypto Market as US Authorities Step in to Save Troubled Crypto-Related Banks

March 13th, 2023. The strong headwinds faced by the global crypto market over the past week abated as the US authorities stepped in overnight announcing emergency measures to save failing crypto-related banks. Cryptocurrencies benefited, according to the ATTMO weather-inspired crypto AI forecasting tool. 

ATTMO foresees sunny and even tropical weather in the next 24-72 hours ahead for the two largest cryptocurrencies Bitcoin (BTC) and Ethereum (ETD). Smaller currencies also benefit from the improved market environment but to a lesser extent. Litecoin (LTC), Ripple (XRP), Cardano (ADA), Avalanche (AVAX), Binance (BNB) and Dogecoin (DOGE) face sunny or cloudy weather ahead with temperatures in the 50s.

Tough week behind for the crypto universe🌪️

The crypto universe fell sharply last week, with the global cryptocurrency market capitalization dropping 9 percent to 980 billion US dollars. The two leading currencies, Bitcoin and Ethereum, fell 6.7 percent and 2.1 percent respectively. The selloff was triggered by the announced liquidation of the crypto lender Silvergate Bank (SI.N), followed by the failure of Silicon Valley Bank (SIVB) on Friday. This is the second-largest US bank failure ever and the largest since the financial crisis that swept across the globe in 2008. SVB had close links to the crypto universe, as it financed numerous crypto start-ups and venture-backed start-ups. 

Banking crisis escalated over the weekend🌩️

Over the weekend the banking crisis escalated when another major crypto lender – Signature Bank (SNBY) – was closed by the US regulators and its assets seized. “Today we are taking decisive actions to protect the US economy by strengthening public confidence in our banking system,” the US Treasury, Federal Reserve and Federal Deposit Insurance Corporation (FDIC) said in a joint statement. 

US regulator stepped in on Sunday, guaranteeing deposits⛅

The three regulators announced depositors of Signature Bank and SVB will have full access to their deposits when the two financial institutions open in the US later today. “Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayers,” they said. The same goes for Signature Bank.

Coinbase, the world’s second-largest crypto exchange, tweeted it continues to operate as usual. “As of the close of business Friday March 10, Coinbase had an approximately $240m balance in corporate cash at Signature. As stated by the FDIC, we expect to fully recover these funds… Your assets remain safe & available for on-chain sends,” the exchange said on Twitter. Its main competitor Binance has not yet commented on the latest developments.

Crypto boosted by US bank saving measures🌤️

The crypto universe made a U-turn on the announced measures, with last week’s losses being entirely recovered. Bitcoin has over the past 24 hours risen 8.5 percent, Ethereum 8 percent, Binance 9.2 percent and Cardano 10.4 percent. 

This afternoon, investors will also focus on the latest US inflation figures, which will be released at 18:30 CET. Year-on-year, the inflation is forecast to have slowed to 5.5 percent from 5.6 percent in January, according to the analyst consensus. 

Comments made by the eurogroup’s finance ministers ahead or after their monthly meeting may also move the financial markets. Inflation developments and the policy objectives of a digital euro are on the eurogroup’s agenda.

The US regulators' emergency announcement over the weekend has another indirect impact on the crypto universe. The Federal Reserve is now expected to raise its benchmark interest rate less than previously anticipated at its upcoming meeting next week. This is good news for cryptocurrencies as the returns of interest-rate-dependent assets such as bonds will be somewhat less attractive to hold.

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.