Sideways Lull

Daily Updates:

• Stuck in a sideways lull between $83K and $84K since last Friday, BTC appears to be consolidating around 20% below its all-time high of $109K. 
• That muted sentiment in spot is reflected in derivatives markets too – while both BTC and ETH’s term structures of volatility have re-inverted at the end of the weekend following a Friday flattening, both have compressed considerably since last week’s highs.
• Although they are no longer trading below spot price, short-dated futures do not trade with anywhere near the spread above spot that they did during the run to $109K in January. ETH futures trade with a similar spread to BTC’s, despite markets pricing-in a volatility premium to the second largest crypto-currency by market cap.

‍

• The lack of new news in the drivers that we believe have driven crypto price action for much of the recent past (supply and demand, macro, and regulatory) perhaps explains the wider consolidation of the crypto market. It’s the first time in two weeks that President Trump has not added to his zig-zag tariff roadmap with a weekend announcement of new levies, or announced that he will be cutting back on existing ones. Additionally, demand in Spot BTC ETFs has been negative since the 6th of March, with all trading days having seen outflows (barring only March 12). Since President Trump’s inauguration, Spot BTC ETFs have registered overall outflows of $2.89B. Institutional buying has also dried up over the past few weeks, as part of the broader derisking.

‍

• However, the week ahead is an important week from a global macro perspective. Multiple central banks are expected to gather – whilst most have already met once since President Trump’s inauguration, this will be their first meeting since the President has noticeably escalated his trade policy and a tit-for-tat trade war. 

‍

1. The Fed is expected to keep their rates on hold at 4.25-4.5% as Chair Powell already stated to the Senate recently that the Fed does “not need to be in a hurry" to cut rates with inflation running well above the 2% target. Additionally, as surveyed by the University of Michigan on Friday, inflation expectations over the next 5-10 years jumped to an annual rate of 3.9% – the largest jump since 1993. With markets pricing in a 99.0% chance of a rate cut on March 19, the focus will be on the updated economic projections from FOMC members and Chair Powell’s press conference. 
2. The Bank of Japan is expected to hold their rates steady at 0.5%, having increased them by 25bps in January. 
3. Additionally, in what appears to be a wait-and-see approach globally, later in the week, the Bank of England is also expected to hold the Bank Rate at 4.5%. 

‍

• Circle plans to integrate Hashnote's USYC, an RWA tokenized money market fund, under its DABA License, linking it seamlessly with USDC. This move aims to position USYC as a top yield-bearing collateral for crypto exchanges, custodians, and prime brokers.
• OKX has paused their DEX aggregator and limited new wallet creations in specific markets in a bid to increase security following the “unsuccessful efforts by Lazarus group” and an increase in targeted attacks. OKX has already rolled out a hacker address detection system for its DEX aggregator and a real-time tracking system to block hacker addresses in its CEX platform.
• Ethereum is set to launch a new testnet (Hoodi) today on March 17, as Ethereum developers look to replace testing on the Holesky testnet. Pectra will activate on Hoodi by March 26, which could push the official Pectra mainnet upgrade to mid-May.
• Abu Dhabi state-owned investment firm MGX announced a $2B investment in Binance exchange, marking the exchange's first institutional investment and the largest-ever investment paid in cryptocurrency – as the $2B amount was paid for using stablecoins.

This Week’s Calendar:

Charts of the Day: