CRYPTO week ahead: April 30 – May 6

2023年5月1日

Last week in the news

Another week marked with potential failure of the banks in the US. The First Republic Bank was for one more time in the news as its share price significantly dropped in value during the previous week. For one more time, the crypto market has been supported by insecurity of depositors in the banking sector. On other hand, equities gained on earnings reports. Bitcoin is finishing the week modestly below 30K, Ether is holding above 1.9K.

Situation with the First Republic Bank is not improving. The bank went into problems during the same period when Silicon Valley Bank and Signature Bank collapsed, but managed to survive the first wave of troubles in the banking sector. Management of the bank managed to buy some time to restructure the bank and put it into recovery. However, as per news from the previous week, it seems that this will not be the case. Share price of the bank dropped by 43% on Friday, as the news spread that the Federal Deposit Insurance Corporation would most probably have to step in. Since the beginning of this year, shares of the bank dropped by 97%. This news once again supported the crypto market, bringing BTC back to 30K level.

Crypto industry requires clear guidance from regulators, however, SEC Chair Gansler noted that current regulation is sufficient and that the industry needs to comply with it. Coinbase (COIN) was the first company to fight for this guidance through court. Namely, the company used U.S. Circuit Court to pressure SEC to answer with simple “yes or no“ to the company`s petition from July last year, when they officially asked SEC to “propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods”. The SEC did not make any comments on Coinbase's petition. The Blockchain Association CEO, Kristin Smith, commented on the current state of developments as “absolute war” between crypto industry and US regulators.

Regardless of regulators' view, the mainstream industries are continuing to incorporate crypto currencies and wallets into their business. Mastercard announced the launch of verification standards for cross-border transactions, called Mastercard Crypto Credential. These set of credentials will allow compliance with the Financial Action Task Force`s travel rules. At the same time, PayPal announced that the company will enable on-chain transfers from Venmo wallets, from May this year.

Ripple announced its XRP Markets Report, noting that the company sold 361 million worth of XRP tokens in Q1 this year, which is an increase from 226 million in Q4 2022. Ripple is developing its international payment network which is based on XRP token, with the aim to allow international payments excluding correspondent banking.
During the forthcoming week, both ECB and FED` rate decisions are scheduled, which promise some increased market volatility.

Crypto market cap

Banking crisis continued in the US, with First Republic Bank currently in the spotlight. The latest news published by CNBC on Saturday is that a few big banks, including JPMorgan and Bank of America are asked to place bids for First Republic Bank. Such news is increasing the insecurity of bank depositors and, at the same time, positively impacting the price of major coins. Depositors are seeking a safer place for their funds, transferring part of their funds into crypto coins, especially Bitcoin. Similar situation we have already seen with the collapse of SVB and Signature bank, which drove the price of BTC toward the 30K. Total crypto market capitalization was increased during the previous week by 3%, adding 33B in value of the market. This drive was mostly influenced by Bitcoin, which added 30B to the cap on a solo basis. At the same time, daily trading volumes were modestly decreased to the level of 52B on a daily basis, from 71B achieved during the week before. Total crypto market capitalization increase since the beginning of this year currently stands at 54%, where it has added a total 409B to the market cap.

Due to the banking crisis, BTC was the absolute winner of the previous week. The coin managed to gain 30B in value, increasing its market cap by 5.7%. BTC was followed by Ether, which managed to add 33B to its market cap, increasing it by 1.3% w/w. Other coins were traded in a mixed manner. BNB was on a losing side, decreasing its cap by 11B or 2%. Coins with good performance in relative terms were Litecoin, with an increase in cap by almost 4%, Solana gained 6%, Filecoin 3% and ZCash 3.3%. Few coins lost significantly in value during the week like OMG Network with a drop in value of 12% and Algorand who lost 8.3% in value. As for coins in circulation, there has been a relatively larger number of small changes, among which Tether continued to gain with 0.3% w/w, while Filecoin, Polygon and Polkadot gained 0.3% each in total circulating coins.

Crypto futures market

The price of Bitcoin continues to be supported both on the spot market and on the futures market. Banking crisis pushed the price of the BTC futures to the upside during the previous week, where short term futures were traded by almost 8% higher from the end of the week before, while futures with longer maturity closed the week by some 6% higher. Futures maturing in December 2023 were traded at price 30.5K, while those maturing in December next year ended the week at price of 31.3K. Market continues to positively perceive future prospectus of BTC price.

At the same time, ETH futures were traded in a mixed mode, and without any significant change in price from the week before. Short term futures were up around 3%. Positive developments were with futures maturing in December this year, where the price managed to hold above 1.9K. Price for the futures maturing in December next year remained almost unchanged, but on a positive side is that it still holds above 2K.