#12: March Madness 🫣
Newsletter Content:
📰 Main Topic: What a Week
📈 Quote + Weekly Price Recap: See Below
🚨 Top Stories: SVB Collapse / SBNY Shut Down / USDC and Other Stables De-Peg / US Court Questions SEC’s Argument / Is ETH a Security?
📖 Thread / Read of the Week: SVB Collapse Breakdown
📊 Visual of the Week: Historical Bank Failures
🔭 This Week: Busy Week Ahead
The last week has been monumental…
We have seen 👀
The largest bank failure since 2008
Every stable coin except for Tether lose its dollar peg (who would have guessed)
NY regulators shut down Signature Bank
NY lawsuit alleging ETH a security
US Court push back on SEC’s Bitcoin ETF judgement
BTC giving up 50% of its yearly gains, only to be followed by a ~20% bounce back, representing its largest daily gain in some time
Hard to imagine a more exciting industry to be a part of.
The positives: ✅
The main reason for Bitcoin’s creation received a lot of attention
Depositors will be made whole and taxpayers will not eat the bill
Stablecoins returned to their peg, ensuring minimal losses to crypto participants
Future rate hike predictions lowered significantly
Money printer returning soon from the FED?
Decentralized exchange volume reached its highest volume day ever
The negatives: ❌
Without Silvergate and Signature, the list of banks that are able and willing to touch crypto is dwindling
The growing list of regulation is scaring additional players from entering the space
Regulators have it out for crypto and there is no end in sight
Innovation is being pushed out of the US due to unclear guidance
What are the long term implications of this situation?
Quote of the Week:
“Banks are to the economy what the heart is to the human body. They cycle necessary capital through the whole, and they are barely noticed until pressure, necessity, or crises.” - Hendrith Smith
Price Performance:
Top Stories:
Silicon Valley Bank Collapses
Broken down in the “Thread/Read of the Week” below:
Signature Bank NY Shut Down By Regulators (Bloomberg)
Following the collapse of Silvergate, Signature remained as one of the only crypto friendly banks. On Sunday, NY regulators shut them down.
Unlike the banking failures of Silvergate and SVB, this was not the direct result of a bank run or mismanagement. Barney Frank, a Signature Board Member who was also a former congressman, stated:
“Regulators wanted to send a very strong anti-crypto message… There was no insolvency based on the fundamentals.”
Overall, this is the US saying, “we don’t want any part of crypto banking over here, take that somewhere else”.
Which is rather concerning for an industry that has so much international potential. Now, the US will likely be watching from the sidelines as opposition (China) takes ownership of the crypto and traditional banking collab.
USDC and other Stables de-peg from $1:
Good read about it in this Twitter thread:
New York AG Alleges ETH is a Security in KuCoin Lawsuit (Blockworks)
Back in 2018, the director of the SEC, William Hinman, labeled ETH as “sufficiently decentralized” and therefore not a security.
However, there is some pushback on this statement (especially since Mr. Hinman now works for a16z Crypto).
New York is now refuting this statement by claiming ETH is a security in their most recent court filing vs KuCoin.
Why? They’re claiming that the core team behind Ethereum (Vitalik and friends) impacts price movements via their network upgrades and various plans to improve the ecosystem.
One key point being brought up is The Merge that made ETH proof of stake as opposed to proof of work. This lawsuit is also going after the KuCoin staking product, which is a nightmare for any crypto company looking back on these last few years.
US Court Questions SEC's Rejection of Grayscale's Bitcoin Fund Proposal (Reuters)
There was some positive news this week!
Thread / Read(s) of the Week:
Visual of the Week:
This Week: Busy Week Ahead!
Monday (3/13): Biden Speaks on the Current Banking Crisis
Tuesday (3/14): US CPI Data
Wednesday (3/15): US PPI Data
Thursday (3/16): European Central Bank: Rate Hike Decision