BTC hits $28K. But is Bitcoin’s rally coming to an end?

Is Bitcoin’s rally coming to an end?

Good morning Asia, this is how the markets start the trading day of the East.

Bitcoin starts the trading day in the red, falling 0.63% to USD 27,805. Ether is down 2.5% to $1,741.

The big question on everyone’s mind, of course, is interest.

In a recent report, Goldman Sachs chief economist David Mericle said the Fed will pause rate hikes because of pressure on the banking system.

“While policymakers have reacted aggressively to strengthen the financial system, markets do not seem fully convinced that efforts to support small and medium-sized banks will prove sufficient,” Mericle wrote. “We think Fed officials will therefore share our view that stress in the banking system remains the most immediate concern for now.”

Delphi Digital co-founder Tom Shaughnessy says the market is sending mixed signals. While many say the possibility of the Fed pausing rate hikes is a bullish signal for bitcoin, the reality could be quite different.

“The data suggests that once the Fed stops raising or tipping, that is historically when markets sell out,” he said on a recent CoinDesk TV appearance. “I think the rally is not so much about the Fed pausing, but more about liquidity pressures or excesses there.”

Data from CryptoQuant may support Shaughnessy’s thesis. The Adjusted Output Profit Ratio meter, which tracks HODLers’ profitability, shows that more investors are selling at a profit. In the middle of a bull market, this could indicate a market top.

At the same time, net unrealized gains and losses show that investors are in a fear phase, where they have moderate unrealized gains.

All eyes will be on the next Fed announcement to see if it is bullish or bearish for bitcoin.

Crypto VC finance has been resilient in the bear market. It now works through this mini-bull cycle.

The crypto winter has been a hard and cold winter for venture capital deals. A report from CoinDesk in January painted a bleak picture for VC activity: a 91% year-over-year decline.

Crypto VC funding comes right back with it.

“Despite the inherent volatility of the cryptocurrency market, venture capitalists remain undaunted and continue to make significant investments in the industry, recognizing the huge potential for long-term growth,” the CryptoRank analyst team said in a note prepared for CoinDesk .

CryptoRank analysts say that the confidence of the VC market is bolstered by the substantial increase in the number of funding rounds seen in recent months, which the analysts say points to growing interest and optimism within the sector.

“Many funds reported losses in 2022 and must now reduce their investment activity,” the analysts said in their note. “Other VCs, who were more cautious with their investments last year, are now taking the opportunity to use the capital they saved.

Risk assets are suddenly back in play.

Banking remains a challenge, but other financial institutions are doing their best, some of which are outside the US and beyond the reach of the regulatory regime.

For VCs, this is a separate and unique problem; they need a bank familiar with the industry. Crypto and tech startups and small VC funds are rejected by many banks because they are not considered worth the risk.

“The issue has much broader implications than the temporary depegging of stablecoins. We expect a decline in VC activity, which will have a knock-on effect on crypto fundraising,” the analysts wrote in their note. “SVB provided one of the most popular banking infrastructures for VC investors. Now they will have to look for new opportunities, but the pressure on crypto-friendly banks is a major red flag.”

This may be Singapore’s time to shine. It is clear that banks with USD rails will fill the gap. DBS is considered a contender as it runs a crypto exchange. Or maybe it’s something completely different.

“VC fundraising for crypto is driven by a younger generation of alternative fund managers who are breaking away from TradFi institutions to raise their own capital in Asia,” added Katherine Ng, Managing Director of TZ APAC, Asia’s leading Tezos blockchain Incubator.

For now, US banks still dominate the sector and have an excessive influence on all regions. But it could be time for other institutions to step up.

Non-crypto-related deposits from the former Signature Bank (now Signature Bridge Bank) will be acquired by Flagstar Bank, NA, a subsidiary of New York Community Bancorp, starting Monday, according to the FDIC. Custodia Bank founder and CEO Caitlin Long responded. Additionally, Carole House, former National Security Council director of the White House National Security Council, discussed her new role on the CFTC’s Technology Advisory Committee.






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