Daily News | US Regulators Launch $25bn Lending Program as Bitcoin Stabilizes Post-SVB Banking Crisis, Stablecoin Volatility Surges as USDC Depegs
Crypto Daily Digest: Bitcoin stabilizes after SVB banking crisis, but shutdowns of crypto-friendly banks threaten digital-asset market
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US regulators have announced a new $25 billion lending program to stabilize the financial sector following the failure of Silicon Valley Bank. The program is offered by the Federal Reserve and funded by the Treasury to offer loans to eligible banks and other depository institutions. As a result, US stock futures rose and the dollar weakened. Anxiety remains high ahead of this week’s consumer price index report, but reassurances from regulators over SVB are having a positive impact. In response, oil, gold, and Bitcoin have risen, while government bond yields have fallen in Australia and New Zealand.
After the banking crisis at SVB, which affected crypto markets and caused Bitcoin to slide to multi-month lows, the latest data shows that Bitcoin‘s price is stabilizing and a relief rally is underway. Although stablecoins were affected, contagion failed to spark significant selling. While funding rates across exchanges suggest that most are still betting on fresh btc price downside, the potential for a “short squeeze” is clear.
However, the shutdowns of two crypto-friendly banks, SVB and Silvergate Capital, have created problems for the digital-asset market. SVB’s failure caused Circle Internet Financial’s USD Coin to de-peg, while Silvergate’s shuttering of its Silvergate Exchange Network (SEN) threatens to stifle growth by exposing legitimate crypto businesses to risks. Without SEN, costs of fiat conversions could increase, and smaller exchanges and over-the-counter desks may struggle to compete without access to the same liquidity and resources as before. Despite this, alternatives to SEN are emerging.
Topic of the Day: Stablecoin Price Volatility Spikes Amid USDC Depegging, Prompting Aave to Take Precautionary Measures
Stablecoin Price volatility has been on the rise due to the recent depegging of USD Coin (USDC), and as a result, Aave, a lending protocol, has taken action to prevent any negative effects on its platform. Aave has frozen stablecoin trading and set the loan-to-value (LTV) ratio to zero. This decision was based on an analysis by decentralized finance risk management company Gauntlet Network, which recommended temporarily pausing all v2 and v3 markets.
Moreover, the collapse of Silicon Valley Bank (SVB) on March 10 triggered a surge in trading volume on centralized crypto exchanges. This news has caused significant concern within the crypto community, and it is anticipated that more banks may face the same fate. Circle, the company behind USDC, disclosed that $3.3 billion of its $40 billion reserves were stuck at SVB. This revelation resulted in the usdc price falling below its $1 peg, and it also impacted other stablecoins. The situation has created a ripple effect in the crypto space, highlighting the need for more robust risk management and regulatory frameworks.
Aave (Aave) $72.76 (+0.17%) - Neutral Outlook
Overview:
- Closest hourly support zone: 72.45 - 71.33
- Closest hourly resistance zone: 73.97 - 76.36
- Key Level: 76.36 (Monthly Close of Nov. 2020)
The BTC short squeeze had a widespread impact on the market, causing an increase in most altcoins, including Aave. It is uncertain whether this sudden surge is sustainable without a pullback, so it would be helpful to analyze the 4-hour timeframe. On this timeframe, Aave exhibited a bullish divergence on its RSI between Mar. 10 and 11, coinciding with its price reaching the weekly level of 64.00. Two extremely bullish candles followed, negating the previous formation of a “lower-low” price action by closing above the daily bearish Fibonacci golden zone [72.45 - 70.82]. Looking ahead, Aave bulls will likely aim to invalidate the “hiccup” observed in the first half of March by targeting a previous daily bearish Fibonacci golden zone [78.94 - 79.93]. However, a pullback to the weekly level of 71.33 may occur before the surge continues. Conversely, if Aave closes within the weekly Fibonacci golden zone [70.99 - 66.36], traders may reposition themselves, resulting in some consolidation.
Hourly Resistance zones
- 73.97 - 76.36
- 78.94 - 79.93
- 80.65 - 82.44
Hourly Support zones
- 72.45 - 71.33
- 70.85 - 68.92
- 67.66 - 66.36
