Bitget Hot Takes (March 06 - March 12)
Bitget Hot Takes is the exclusive weekly newsletter series by Bitget Academy, the 360-degree onboarding guide for all crypto enthusiasts.
Bitget Hot Takes last week can be found here.
• Indicators suggest that BGB is on another upward course.
• Out of business: Silvergate, Silicon Valley Bank and Signature Bank; FED emergency meeting on March 13, 2023.
• USDC depegged, causing DAI and USDD to follow suit.
Indicators Suggest That BGB Is On Another Upward Course
After breaking the record for its all-time high twice in February 2023, BGB has been seeing some cooling sensation since the US$0.51613 mark. However, if we take a look at the relative strength index (RSI), and especially the accumulation/distribution (Accum/Dist) line, BGB seems to be on a quiet upward course over the weekend.
And despite the red in the first half of the week, BGB's 7-day volume didn't see any sell-off; a slightly lower volume also hints at investors’ decision to hold the token. Check out this quick guide to know why BGB has become the new staple:
… or devour these detailed BGB analyses:
When The Banks Fail
There are no bigger stories than that of Silvergate, Silicon Valley Bank, and Signature Bank at the moment. Silvergate is, or more precisely, was the most crypto-focused bank with its Silvergate Exchange Network (SEN) - a 24/7 settlement service for big players in the U.S.
On March 04, Silvergate announced the shutdown of SEN with ‘immediate effect', and rumours across the streets said they already saw a big truck with a loading ramp in front of the Silvergate building before the firm ceased its banking operations on March 08, 2023. The meltdown brought Bitcoin price below 20K due to Silvergate's close ties with crypto markets.
In terms of size, Silvergate deposits are a tiny portion of its peers’: Silicon Valley Bank (SVB) and Signature Bank. In 2022, deposits at Silvergate stood at US$6,297,000,000, at SVB US$173,109,000,000 and at Signature US$88,590,000,000. When Silvergate failed, crypto institutions turned to SVB and Signature, thinking they had found the safe on-ramp alternatives. Turns out even a positive return on average total equity can't offset the internal bleeding caused by rising interest rates.
Circle is the direct casuality of this chain of events. The stablecoin issuer holds their USD reserve at 8 ‘U.S. regulated financial institutions', including all three aforementioned banks. And the standard Federal Deposit Insurance Corporation (FDIC) insurance is capped at US$250,000 per depositor at each insured bank (SVB and Signature, Silvergate is not FDIC-insured), meaning Circle is currently unable to maintain their 100% reserve for the USD Coin. That explains the FUD behind USDC, which led to insane withdrawal requests and eventually the depegging of USDC.
On March 11, 2023, USDC spiralled down to as low as US$0.878874, equivalent to a 12% value loss. Over-collateralisation stablecoins that use USDC for collaterals experienced a similar depeg; in the cases of DAI and USDD, losses were on par with USDC.
DAI chart. Source: CoinGecko
USDD chart. Source: CoinGecko
• Increase USDC-DAI swap fees to 1% (to avoid USDC dumping and a further USDC depegging)
• Reduce daily mint limit for USDC deposits by 74% (from 950 million DAI to 250 million DAI)
• Reduce daily mint limit for GUSD deposits by 80% (from 50 million DAI to 10 million DAI)
• Increase daily mint limit for USDP deposits by 500% (from 50 million DAI to 250 million DAI)
• Reduce USDC-DAI swap fees to 0%
Why was GUSD caught up in this bloodbath, you may ask? Check out our Annual Briefing here, where we examine the volatility of GUSD, together with other stablecoins. In no way linked to either USDC, DAI or USDD, but GUSD became risky after it lost its peg on March 11 and seems to continue to go down.
GUSD chart. Source: CoinGecko
The way out? FDIC is intervening with the creation of the Deposit Insurance National Bank of Santa Clara (DINB), through which insured depositors can access their full deposits by today (March 13, 2023), and uninsured depositors can receive ‘an advance dividend' within the week from March 13 to March 18. Anyone who has more than US$250,000 stuck at SVB should contact FDIC for direct support.
Secured depositors of Signature Bank will also be protected by the FDIC, however, unsecured depositors have to wait for further information from authorities regarding their funds. The Federal Reserve is having an emergency meeting later today to discuss the fallout of SVB, which should impact multiple startups and entrepreneurs who put most (if not all) of their raised funds into SVB.
The Latest Bitget News
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In relation to the incident with USDC, we are currently suspending USDC deposits on several chains to ensure a safe trading environment. USDCUSDT trading pair is added to our USDT-Ⓜ️ Futures so that our users can take advantage of the situation at any time!
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