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XRP Drops on Profit-Taking; Binance In Hot Water After Reports of Concealing Ties to China, Euro Area inflation Figures to Be Released Tomorrow

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March 30, 2023 – The global crypto market will be bullish or slightly bullish in the four hours ahead, according to ATTMO, a weather-inspired crypto AI forecasting tool. Particularly Ethereum (ETD) and Litecoin (LTC) have upside potential, and Bitcoin (BTC) to a lesser extent. 

Chainlink (LINK) bucks the positive trend, finding itself in a bear market, but good news. ATTMO foresees a market rebound in the coming four hours.

Over a one-week horizon, a market correction is however likely for both major cryptocurrencies – Bitcoin and Ethereum, ATTMO data shows. A market correction for Litecoin is also forecast. Analysts expect investors to start cashing in on their gains. 

Bitcoin rises supported by bank turmoil 

Crypto markets traded mixed on Wednesday. The price of Bitcoin rose 0.9 percent to 28,696 US dollars, edging above 29,000 dollars, for the first time since early June, earlier on Thursday.

”As the quarter end is approaching this week, fund managers likely want to show that they own the ‘right’ stocks when they send out their statements next month. That’s why they have to buy tech stocks this week. Bitcoin could break 30,000 this week,” said Markus Thielen, head of strategy and research at Matrixport on LinkedIn. He nevertheless recommends being ready to buy the dip as markets could fall back to 25,500 dollars. 

ETH confirms Shapella upgrade for April 12

Ethereum fell 0.9 percent despite a confirmation that its Shapella upgrade will be activated according to schedule on April 12. The upgrade will finally enable ETH stakers to withdraw their rewards. Read more about the Shanghai upgrade (changes to the execution layer) here and about the Capella upgrade (changes to the consensus layer) here.  

XRP drops on profit-taking

Among smaller currencies, XRP dropped more than 5 percent yesterday on profit taking. XRP has rallied more than 25 percent over the seven days boosted by rumors that its owner Ripple will be able to settle an ongoing court case with the US Securities and Exchange Commission (SEC) as early as this week.  

The SEC claims that XRP is a security and falls under SEC’s jurisdiction rules. XRP claims its products are commodities, which fall under the jurisdiction of the Commodity Futures Trading Commissions. Crypto investors hope that the judge’s ruling will end the regulatory uncertainty surrounding which crypto assets traded in the US and have a wide-ranging impact on the entire crypto universe. Why? Commodities are taxed more favorably and regulated less stringently than securities. It’s much more expensive to ensure that securities comply with all regulations in place.

Binance falls on report it hid ties to China

Binance fell 0.9 percent as investors are pulling billions of dollars out of the exchange as problems accumulate, the Wall Street Journal reported.

The world’s largest cryptocurrency exchange reportedly concealed ties to China. “Chief executive Changpeng Zhao (known as CZ) and others holding senior positions repeatedly instructed Binance employees to hide the company’s Chinese presence. This included an office in use until at least the end of 2019, and one Chinese bank that was used to pay some employee salaries,” the FT reported. Officially, Binance cut its tie to China at the end of 2017.

This adds to Binance’s other recent troubles – the US Commodity Futures Trading Commission (CFTC) lawsuit against the crypto exchange and its CEO Changpeng Zhao claiming they violate the country’s derivates trading rules. 

Meanwhile, Binance announced it will open up a new regional hub in Georgia, a former Soviet republic, to “accelerate crypto adoption in the region:” The company also aims at attracting talents and promote blockchain education, the exchange said in a blog post.

Tomorrow’s Inflation data will indicate central banks’ future action 

Investors will focus on the latest euro area inflation figures when these are released tomorrow Friday. Year-on-year, the euro area’s March inflation is set to slow 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 up-coming 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. Another 50-basis point rate hike is priced in by the market ahead of the ECB’s meeting.

Critics argue that continued rate hike 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.

Overseas, the release of the US personal consumption expenditures price index (PCE) on Friday will also indicate whether the inflationary pressure continues. The PCE captures inflation across a wider range of consumer expenses than traditional inflation (CPI) data. Analysts expect the PCE to edge lower to 5.3 percent in February, compared to 5.4 percent the previous month.

”The Fed is nearer to the end of its tightening cycle compared to the ECB,” SEB wrote in a market comment.

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.

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