First Republic Woes Renew Banking Crisis Fears


Weekly News Wrap Up

Fears of a banking crisis and credit contraction plagued markets again last week following First Republic Bank’s disappointing earnings and potential $100B asset sales. Technology fared better from better-than-expected earnings by Meta Platforms Inc. and Microsoft. In Crypto, the European Union (EU) became the first major jurisdiction to approve a comprehensive crypto regulatory framework (MiCA), and markets were spooked by a “buggy” alert from Arkham Intelligence that wallets linked to the U.S. government and Mt. Gox had moved large amounts of BTC.

Price action for the week: U.S. equities managed to eke out a gain with SPX+0.87%, DJIA +0.86% and NASDAQ +1.28% as better-than-expected earnings from Big Tech outweighed renewed fears of a banking crisis. BTC +6.02% and ETH +0.50% after a volatile week, trading between $27K-$30K and $1,790-$1,965 as they struggle to regain key psychological price-levels of $30K and $2K respectively.

On-chain, @glassnode suggests that neither the US Government nor Mt. Gox Exchange Reserve is spending any BTC from the addresses it monitors. On 31 March 2023, court documents indicated that the US Government plans to sell over 41,000 BTC, seized in connection to the Silk Road case of James Zhong, in four tranches throughout 2023. This news raised concerns about the potential selling pressure on the Bitcoin market. The first chart above tracks the balance and transfers of Bitcoin seized publicly by the US Government, while the second chart tracks the total number of Bitcoin in the Mt. Gox Exchange Reserve. These charts provide valuable insights into two significant events that have the potential to impact the Bitcoin market.






Cryptocurrency News

  • European Union (EU) parliament passes MiCA by 13:1 margin. The new regulation covers the supervision, consumer protection, and environmental safeguards of crypto-assets, and targets crypto-assets not regulated by existing financial services legislation. The law will start applying next year, subject to the final vote in the Council of the EU on 16 May.
    Our View: the EU has become the first major jurisdiction to approve a comprehensive crypto regulatory framework that could provide a boost for EU crypto businesses with greater clarity. See the screenshot below from Circle’s Director of EU Strategy and Policy, Patrick Hansen, for an overview of MiCA.



  • Coinbase takes legal action against the SEC. The exchange asked a federal court to order the SEC to provide “regulatory clarity” around how existing securities laws might apply to the digital asset sector. The SEC issued Coinbase a Wells Notice last month, and this filing could be viewed as a preemptive move by the company to argue that the SEC’s approach does not provide sufficient regulatory guidance.



  • Franklin Templeton expands its money market fund on Polygon. The company said its OnChain U.S. Government Money Market Fund (FOBXX) is now supported on Ethereum via layer 2 blockchain Polygon. The fund is the first U.S. registered mutual fund to use a public blockchain to process transactions and record share ownership, the investment firm claimed in the press release.
    Our View: once again we’re seeing a TradFi giant embrace the technological benefits that blockchain technology can offer, and could pave the way forward for other firms to follow.


  • ‘Winter is over’ and bitcoin may hit $100,000 next year, says Standard Chartered. The recent U.S. banking crisis spurned a price rally in bitcoin and re-established its core use case “as a decentralized, trustless and scarce digital asset,” the bank said. It also pointed to the end of the Fed’s interest rate hikes, the next halving of bitcoin, and regulatory benefits.
    Our View: pretty bullish view from Standard Chartered, but the report does highlight valid price drivers for BTC


  • Binance.US backs out of $1B Voyager asset purchase, blames regulatory environment. The parties got the go-ahead on the deal last week after overcoming several objections, but Binance.US changed its mind.
    Our View: not surprising given the recent CFTC enforcement action against Binance and its CEO. As a conservative measure, the company is probably looking to diversify its exposure out of the U.S., like many other crypto firms, given the stricter regulatory environment we have witnessed this year






Investment Consideration

Our best strategy for the moment is to take at least 1-3 years in Moderate Portfolio because it has a good defense with 50% Fixed Deposit , 30% In DCD and 20% in Staking.  After  all,  we  still  have  potential  returns  in  DCD  and  Staking,  especially in BTC.

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