CRYPTO week ahead: February 27 – March 5

26 февр. 2023 г.

Last week in the news

Stock markets were closed lower on Friday, amid fresh inflation data in the US. The crypto market entered into a short reversal, but is still holding above last year's lows. Bitcoin is finishing the week around 23K, while Ether below 1.6K.

Personal consumption expenditure price index is one of the main indicators for the FED to anticipate where the inflation is heading. During the previous week, released PCI figures showed an increase of 0.6% in January, bringing it to 4.7% on a yearly level. This was higher from market expectation of 0.5% for a month. This was also a signal for markets that the FED still has a job to do with further inflation fighting, which would most certainly include further increases of interest rates. As per analysts, current predictions assume further increases by the mid-year, after which, the FED might slow down, of course, if they manage to break the demand side.

A group of 20 (G20) nations held a meeting with the IMF in order to discuss current debt restructuring issues for troubled countries, but they also used the opportunity to mention crypto currencies. The IMF Chief Kristalina Georgieva used this opportunity to distinguish between central bank digital currencies backed by fiat currencies, including stable coins, from coins which are privately issued. In this sense, she argued for tight regulation and supervision for privately issued coins in order to avoid risks for financial stability. In case that regulation is unable to put strict controls over crypto currencies, then she noted that they should be banned.

As per a CNBC report, the US SEC is “gearing up” to put some charges against Paxos, a company that issues stablecoin. As per the same report, during the previous week the New York state`s regulator ordered Paxos to halt further issuance of BUSD. The Paxos company commented that it has been ordered by the SEC to register BUSD as a security. The situation with Paxos is very important for other issuers of stablecoins, as they might also be requested to impose the same procedure.

There has been further news with respect to crypto regulation. As per the Financial Action Task Force report from its last meeting, this global institution will set action for implementation of its global standards for crypto. The FATF is a global institution of 206 members with the main task to set global standards for money laundering and terrorist financing.

The European Central Bank published a document “Rollout approach for the digital euro” in which it exposes Eurosystem`s analysis on the approach to rollout the digital euro. As per document, the priorities of the introduction of the digital currency will be peer-to-peer transactions and online purchases, while the commercial and governmental use are scheduled for the second phase.


Crypto market cap

Assumptions of the market participants that the fight with inflation is still not over are finally supported through official data. The released PCI figures last week showed an increase of 0.6% in January, bringing it to 4.7% on a yearly level. It collides with other figures posted previously, which provided clear signal that FED will most probably further increase interest rates until the mid-year, at least. The targeted 2% is still far away, which decreases market optimism. Both the equity and crypto market lost some of value during the end of the previous week. Total crypto market capitalization is down by 6% or 60B on a weekly basis, but still the total cap holds above $1 trillion and also above the level where the market finished in 2022. At the same time, daily trading volumes continue to decrease, reaching around 88B on a daily basis. Total crypto market capitalization has increased by 34% since the beginning of this year, adding total 259B to the market cap.

Major coins on the market were leading market capitalization drop during the previous week, participating with 75% in a total decrease of 60B. Bitcoin decreased its market cap by 31B or 6.5%. BTC is followed by Ether, with weekly drop of 12B in the cap or 5.8%. Last week BNB has also been on a down road, with a decrease in cap by more than 22B or less than 5%. Polygon also experienced a significant decrease in the market cap by 22B which is around 16%. On the other side, NEO was a coin which led rare crypto gainers during the previous week. Namely, the coin managed to increase its market cap by 16% within a single week. This move was supported by the news that NEO will be one of the ten blockchains to form China's new Blockchain Service Network (BSN). Miota is another coin with positive weekly outcome, as it managed to surge its market cap by more than 4%. Tether and Filecoin are two coins which are leaders of the market when it comes to increase of circulating coins. During the previous week, Tether`s total circulating coins were up by 0.7%, while Filecoin had a gain of 0.9%.


Crypto futures market

Crypto futures were traded in line with spot price moves. However, positive developments in the slope of future prices continue. Regardless of a general drop in prices, the crypto futures for December 2024 for BTC were traded higher by 0.84%, while ETH futures for the same period were up by 0.76%. This expresses market optimism regarding future prospectus for these coins.

Short term BTC futures were traded around 7% lower from the week before. Futures maturing in December 2023 were traded down by some 3%, ending the week at level of 24K. At the same time, ETH futures had a lower drop in prices, where short term ones were traded around 5% lower on a weekly basis, while December 2023 was down by 0.7%, ending the week at level of $1.687.