09 Mar 2023

The Friday Focus - Issue 76

Prominent crypto bank Silvergate enters controlled liquidation, and crypto prices take a tumble. Get up to date on a U.S. heavy news week in our Friday Focus below.
The Friday Focus
Top Stories
- Crypto Bank Silvergate To Shut Down in Face of Market Turmoil- U.S. Treasury Department Proposes 30% Excise Tax on Crypto Mining Firms- Sillicon Valley Bank Facing Capital ShortageSilvergate, the San Diego-based regional lender that transformed itself into a go-to bank for the crypto industry, is the main protagonist for news this week. The bank announced on Wednesday that it will enter voluntary liquidation, motivated by recent industry and regulatory developments.  According to several industry heavy hitters, the impact of the Silvergate situation on the broader digital asset ecosystem is likely to be minimal. Another specialist bank to keep an eye on going forward, though, is Silicon Valley Bank, who is facing a capital shortage.Crypto prices have taken a tumble in the last part of this week, likely due to a mixture of ‘bad’ news. In addition to the Silvergate saga, the U.S. Treasury Department proposes a 30% excise tax on mining. The U.S. Government is apparently selling $1 billion of seized bitcoin, and Celsius burned $500 million of wrapped bitcoin.  In other industry news, the U.S. DOJ appeals a New York judge’s approval of Voyager’s sale to Binance. Something fishy is likely going on with Huobi and Justin Sun, as usual, and the U.S. Fed is ramping up its efforts to acquire the right expertise to handle crypto. And lastly, the New York Attorney General alleges that Ether is a security in a KuCoin lawsuit.
What's new from our research analysts this week?
In our Tuesday market update, Ahead of the Curve, Senior Analyst Vetle Lunde advised caution:  "During the March 3 sell-off, CME’s OI fell massively, and the active market participant share on CME has fallen to all-time lows. Additionally, perp OI fell by 5% during the decline as long liquidations enhanced market headwinds. We are particularly cautious of the declining CME OI and its implications for the market, as CME flows are highly relevant in shaping BTC’s momentum.Several negative headlines motivate the current poor momentum in the market. Last week, Silvergate announced that they would delay its 10k, citing that the company could “be less than well-capitalized”. Silvergate has been an important fiat payment rail in the crypto market and, thus, important for the market plumbing and liquidity. Further, Mt. Gox aims to start repaying creditors on March 10 (now postponed to April), seeking to repay creditors by September 30, which will add 137,000 BTC back into circulation. Last week saw two major WBTC redemptions as Celsius converted 23,000 WBTC to BTC with the consent of its creditor committee. These redemptions foreshadowed the BTC selloff on March 3, and it’s far from unlikely that this redemption has been motivated by an aim to convert crypto exposure to cash amidst the ongoing chapter 11. " 
Weekend Reading
News card 1 (1)
Read the articleAnd be sure to check out Vetle Lunde's take on the NakaDollar here.Have a great weekend! 
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