Fear and Greed Index rises despite U.S. bank collapse
The Fear and Greed Index of the cryptocurrency market rose 16 points in the last 24 hours after a sharp collapse caused by the closure of several major U.S. banks linked to cryptocurrencies.
The collapse of cryptocurrency-linked banks
Three major U.S. banks linked to cryptocurrencies closed last week. Silvergate was the first to announce the suspension of operations. The announcement came after lengthy rumors of its bankruptcy and termination of cooperation with a lot of major cryptocurrency companies.
Silicon Valley Bank (SVB), which holds the reserves of many cryptocurrency companies, was next in line. News of the closure of the financial institution led to the detachment of one of the largest stablecoins, USD Coin (USDC), from the U.S. dollar.
However, after a record drop to $0.87, USDC regained its peg to the dollar, and bitcoin (BTC) rose 11% in 24 hours, to $24,191 at the time of writing.
In addition, on Sunday, March 12, news of the closure of Signature Bank shook the crypto market. As a result, the Fear and Greed Index fell to 33, even though the index had been at 48 points all week.
The sharp reversal of the index towards greed occurred on March 13. The index reached 49.
The financial market are experiencing turmoil
The crypto market showed relative resilience to events related to the closure of a lot of banks in the United States. However, the stock market experienced significant turmoil — the index was in the zone of extreme fear and continues to fall, dropping to 22 points. Only a week earlier the index was in the neutral zone — 53 points, and a month ago the stock market was in the greed zone with the index of 69 points.
A lot of U.S. expats already compare the current situation with the U.S. financial crisis in 2008, blaming the cryptocurrency. Thus, former U.S. Congressman Barney Frank believes that cryptocurrency may become the main reason for the bankruptcies of major banks. Also, Nouriel Roubini, who predicted the crisis in 2008, believes that the cryptocurrency industry is waiting for a large-scale collapse.
We previously reported about California closing cryptocurrency bank SVB.
Cryptotraders lost more than $250,000,000 in liquidations after Fed rate hike
Cryptotraders had a tough day: almost 68,000 positions were liquidated on exchanges in the last 24 hours, and the total volume of liquidations exceeded $257,000,000. All this happened against the news of the US Federal Reserve’s rate hike and another Securities and Exchange Commission regulatory action against cryptocurrencies.
Cryptotraders lost $132,000,000 in BTC
Bitcoin, Ethereum, and Ripple were the leaders in the number of forcibly closed positions. BTC liquidations totaled almost $132,000,000; Ethereum traders lost $51,000,000. XRP positions accounted for about $8,000,000 of liquidations. Bitmex exchange executed the largest order of $7.39,000,000.
Cryptocurrency market capitalization has declined 2% in the last 24 hours, but is still above the $1 trillion mark.
The weekly CoinShares report also recorded a massive outflow of funds for six consecutive weeks. During that period, nearly $500,000,000 was withdrawn from cryptocurrency platforms, with $113,000,000 coming from bitcoin. Analysts at the company believe the outflow is due to liquidity needs during the banking crisis rather than a negative outlook. The company mentions that a similar scenario was seen in March 2020 amid a COVID-19-induced panic.
Regulators continue to hunt the cryptobusiness
Another reason for the increased volatility in the market has been harsh action from U.S. regulators. Last night it became known that the U.S. Securities and Exchange Commission sued cryptomagnate Justin Sun, accusing him of fraud and market manipulation.
The SEC also issued a notice of wrongdoing against Coinbase, the largest U.S. cryptocurrency exchange. The securities regulator sued Coinbase Global Inc, for some of the products it offers.
We previously reported that Bitcoin (BTC) tests $28,000, but onchain metrics urge caution.
Binance was caught circumventing KYC to register Chinese clients
Employees of the cryptocurrency exchange Binance help clients from China to bypass compliance and verification. CNBC writes about it, citing hundreds of corporate emails from exchange employees on Discord and Telegram. It is reported that Binance has helped over 200,000 users register, bypassing its own security system. One case describes correspondence between a user from China and a Binance employee.
The employee under the pseudonym yaya.z suggested the user from China turn on a VPN, register as a Taiwanese resident and then return the location to China. Binance employees also advise customers not to use VPN services from the U.S., Hong Kong and Singapore, because the exchange does not provide services in those regions, writes CNBC. At the same time, Binance freely processes applications from U.S. email providers like Gmail or Outlook for registration.
The exchange even offers specialized mobile applications for customers from China. A CNBC reporter could download a special mobile application from Binance via email. At the same time, no VPN was needed to download the app, as the download was conducted through the domain of binance[.]com. It is also alleged that the exchange still verifies users with Chinese phone numbers.
An exchange spokesperson denied the existence of a special Chinese version of the mobile application. The exchange also added that it has improved the system to identify users from banned regions. CNBC notes that after providing evidence, Binance removed employee messages from corporate chats to circumvent KYC.
We previously reported that the Ethereum (ETH) price crossed the $1,800 mark, opening the way to $2,000.
Why cryptoanalysts expect bitcoin to fall
The market remains in a bearish trend and bitcoin (BTC) will resume its fall and test $16,000. There are two reasons:
The first statement can be confirmed or disproved by a technical analysis of the cryptocurrency market, but there is not enough additional information for the second.
The market capitalization of altcoins (ALTCAP) does hold nearly $605 billion of resistance. Although ALTCAP has risen above it several times, it didn’t develop above this area.
However, the daily RSI has broken through the bearish divergence trendline (green line). Such a breakout often precedes significant reversals into a bullish trendline. As a result, ALTCAP will move higher towards the $680B resistance area. If not, ALTCAP could fall back to the $518B support area.
There are also those who argue that bitcoin will test the $10000-$11000 area because there is a CME price gap that needs to be filled. The gap refers to the difference between the closing price of bitcoin futures on the Chicago Mercantile Exchange (CME) on Friday and the opening price on the following Monday.
We previously reported that Hong Kong has allocated another $50,000,000 to the crypto industry.
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