M21 MARKET UPDATE – March 2023

This update intends to inform you about relevant market developments and market insights in the digital asset market.

  February March Delta
Total market (Billion) $1.013  $1.153 +13.80%
Bitcoin (dollar) $23,140  $28,450 +22.94%
Ethereum (dollar) $1,599  $1,822 +13.94%
Nasdaq 100 (points) 12,040  13,203 +9,65%
S&P 500 (points) 3,970  4,109 +3.50%

KEY TAKEAWAYS

  • The ensuing collapse of Silvergate Bank, Silicon Valley Bankand Signature Bank (SBNY), followed by the acquisition of Credit Suisse by UBS caused fear for a next global financial crisis.
  • Fears of the financial viability of the banking industry caused a Bitcoin price increase past the $28,000 level as investors rediscovered its appeal as an alternative banking system, and/or a hedge against the traditional banking system.
  • Inflation data February (March 14) rose by 0.4% month-on-month in February, up 6% year-on-year. 
  • FED chairman Powell indicates rate hikes may be nearing an end. This announcement caused a further uptrend in markets, including digital assets.
  • On a monthly basis Bitcoin rose with 23%, Ethereum nearly 15% and the digital assets market 13,82%.
  • Technical analysis shows more signs of a trend reversal towards an uptrend.

Macro-economic Developments

March 2023 was dominated by concerns over wide-reaching problems in the banking sector, following the collapse of three American Banks within a week:

  1. Silvergate, a bank based in California that made loans to cryptocurrency companies, announced on Wednesday March 8 that it would cease operations and liquidate its assets.
  2. Sillicon Valley Bank collapsed on Friday March 10, the largest American bank to fail since the financial crisis in 2008.
  3. Regulators also announced on Sunday March 12 that Signature Bank had been shut down by New York bank regulators to protect consumers and the financial system. It was the third bank failure within a week.

That reality sent tremors through the banking industry. Officials and economists worried that people with uninsured accounts at other regional US banks might begin to fear for the safety of their own deposits — which could prompt them to pull their money out and move it to bigger banks in a hunt for safety. That could turn what might otherwise be a one-off bank failure into a full-blown financial crisis.

These rumors about a potential financial crisis were strengthened when liquidity issues of one of Switzerland’s biggest banks, Credit Suisse, became public. On March 20 2023 UBS closed an emergency rescue deal and acquired Credit Suisse, looking to bring back financial stability in the Swiss economy and aimed at stemming financial market panic.

Digital assets

Fears of the financial viability of the banking industry caused a Bitcoin price increase past the $28,000 level as investors rediscovered its appeal as an alternative banking system, and/or a hedge against the traditional banking system.

Advocates of bitcoin have often dubbed it “digital gold” referring to it as a store of value, particularly in moments of global turmoil, and one that is uncorrelated with other asset classes. Also, it was created precisely for events like this where the current financial system shows signs of weakness. Over the year this argument of bitcoin being an uncorrelated asset class has been debated quite a bit, but we are now potentially seeing that viewpoint being vindicated.

This Bitcoin price increase, and derived increases in the overall digital assets markets continued in the last week of March after the publication of the February interest rates and the announcement by chairman Powell (refer to above).

On a monthly basis Bitcoin rose with 23%, Ethereum nearly 15% and the digital assets market 13,82%.

TECHNICAL ANALYSIS

Bitcoin (BTC) dominance in March increased from 43% to 47%, indicating that Bitcoin is increasingly determining the short-term market sentiment.

In January 2023 BTC broke above the 200 day moving average (200 MA, at that time at $19,5K) for the first time since it fell below this moving average in December 2021. In February BTC price further increased to $25K and then started a price correction downwards.

In the first 10 days of March BTC corrected over 20% to a price level of $19.6K, testing the support of the 200 MA. This support from the 200 MA held and as a result (combined with the macro-economic developments outlined above), BTC had a massive bounce from the 200 MA all the way up to 29K, closing the month of March at $28,450 (also resulting in an important higher low at $20K).

On the weekly timeframe BTC is now back above the Exponential Moving Average (EMA) ribbon and 200MA (around $25,5K). Bitcoin also closed above the weekly 100 day moving average (100 MA) at 28K for the first time since it fell below the 100 MA price level in May 2022. The Relative Strength Indicator (RSI) and Stoch RSI are also up on a weekly timeframe and indicate a bullish momentum. The CME futures gap at a BTC price level of $35K is still open. 

From a technical analysis point of view, we see many signs that BTC is in a reversal process from a downtrend to an uptrend. Conforming this trend shift requires a longer period of trading above the indicated 100 MA and 200 MA levels. A potential bull-trap is therefore still a possible scenario, however more and more indicators already support this potential shift trend and the above analysis demonstrated a first break of the downtrend structure already occurred over Q1 2023. 

ADOPTION CASES

 

MICROSOFT EDGE

Microsoft is reportedly working on a built-in Ethereum cryptocurrency wallet for its Edge browser, which would enable its users to send and receive cryptocurrencies and non-fungible tokens (NFTs) without using additional extensions.

SALESFORCE LAUNCHES SALESFORCE WEB3

‘Salesforce Web3’ has launched, connecting Web3 with the world’s #1 CRM platform: Salesforce.
Salesforce Web3 is a dedicated Web3 Customer Relationship Management (CRM) tool to helps brands build digital communities and enabling building customer loyalty in Web3 on a trusted platform.  Companies can sell or give away NFTs, and all that data comes back into Salesforce’s Customer 360 to link and record customer activity across Web2 and Web3.

Many large corporates use Salesforce as CRM platform, therefore the launch of Salesforce Web3 can accelerate web3 based Customer Loyalty Programs. 

GAMING GIANT SONY FILES NFT PATENT

Entertainment and gaming giant Sony has filed for a patent to make non-fungible tokens (NFTs) transferable and usable between various games, devices, and consoles.

In simple terms, this patent means that players would be able to transfer their in-game assets between various video games, platforms and devices, including computers, smartphones, tablets, smart TVs, and VR/AR headsets, and even “cross-generationally, meaning from one PlayStation generation to the next.

CONCLUSION

March 2023 resulted in positive gains in both traditional markets and the digital assets market. Next to concerns over the banking sector and a potential global financial crisis, also the inflation data and especially the announcement of FED chairman Powell that rate hikes may be nearing an end contributed to this positive sentiment in the digital assets market.

From a technical analysis perspective, a break in the downtrend did occur in Q1 2023 where BTC traded above the 100 MA and 200 MA price levels for the first time in March. In addition, more and more indicators confirm a potential trend reversal from a downtrend to an uptrend – yet more confirmation is needed in the upcoming period.

Looking forward, the inflation data over March and April 2023 and a potential break to the upside of the BTC $30K price level will most likely determine the direction of the digital assets market in Q2 2023.   

DIGITAL ASSET SECTOR UPDATES

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