83rd Edition

Mar 4, 2023

Hey there 👋

Disclaimer: All price movements are recorded up to 03:30 PM UTC, 03rd March 2023

It was a week of price correction. All of the top cryptocurrencies witnessed heavy sell-offs.

Crypto simplified

🏦 Banks are trustworthy and essential components of any economy. Or, at least, that is what is the most accepted notion of banking!

But what happens when a major bank has a bank run? Well, we know the answer a little too well. And that is because this is not a rare event at all!

The problem

Have you heard of any crypto-friendly banks? Well, can you think of 3 such names?

As it turns out, there aren’t many!

Knight in shining armor

The story of Silvergate Capital Corp. is an entirely different one, though! It is so crypto-friendly that it accepts deposits from crypto exchanges and traders and has also built its own payments network for crypto settlement.

🔎 And so Silvergate Capital Corporation, a listed entity with the NYSE (ticker: SI), was loved by crypto exchanges and other institutions. And, obviously, it attracted a lot of crypto deposits. A lot!!

Uno reverse

But today, it is an entirely different story for Silvergate.

In November, following the FTX debacle, investors withdrew $8.1 billion from Silvergate, leading to a chain reaction of negative consequences for the bank.
In order to cover the funds that were withdrawn, the bank had to sell off debt at a loss of $718 million.
Silvergate’s latest financial report reveals staggering losses of $1 billion for Q4 and $949 million for the entire year of 2022. This is in stark contrast to their $76 million profit in 2021.

Silvergate’s stock plummeted ~60% over the week after the bank revealed it wouldn’t be able to file its annual report with the SEC by the March 16th deadline.

👀 What next?

Let’s accept that the timing was bad. Just when the market seems to be recovering, it is faced with another setback. Now, the SEC would be even more closely watching different crypto companies.

However, the silver lining to this whole saga of mishaps has led to the filtration of a lot of fluff from the ecosystem. It remains to be seen, though, how much more of it is eliminated before we bounce back.

Top Highlights of the Week

1. Needs more time in the oven

Ethereum's Shanghai upgrade, which was earlier slated for a March release, has now been pushed back to mid-April, as determined by Ethereum's core devs on March 2nd. The Goerli testnet, essentially a dress rehearsal of the upgrade that will kick off ETH staking withdrawal, is scheduled to go live in its place on March 14th. The Shanghai upgrade's April release hinges on everything going smoothly with the Goerli testnet.

Since ETH staking was introduced in December 2020, the Ethereum network has raked in $28.7 billion in deposits. For context, that's almost 14.5% of all Ethereum in circulation.

Our takeaway: Ethereum's devs have had to sacrifice quite a few technical improvements to Ethereum that would have otherwise come with the Shanghai upgrade to hasten its release. And after these cutbacks, it only makes sense to release the best possible version of this highly anticipated feature.

2. Bullish for the future

Investment banking giant Goldman Sachs is 'hugely supportive' of blockchain technology, states its global head of digital assets, Mathew McDermott. Backing up this statement is the fact that the firm has been developing a tokenization platform, GS DAP, on a private blockchain. The platform was used by the Hong Kong government for the sale of tokenized green bonds worth $102 million. Another entity that leveraged the private platform is the European Investment Bank, which utilized it for bond issuance settlement on the same day, a process that previously took five days.

Our takeaway: Mr. McDermott also stated that Goldman Sachs' digital asset team is looking to bolster its division with new talent. A trusted player in the finance space- one of Goldman Sachs' stature- showing outright support for blockchain tech signals the possibility of greener pastures for cryptocurrencies not too far down the road. The investment bank has shown faith in the technology by building a strong, reliable infrastructure, and it is bound to pay dividends once we're in the bull market.

3. Lending a helping hand

While the frenzy around Bitcoin's Ordinals project has begun cooling down, Yuga Labs is on a mission to revive it. For the uninitiated, the Ordinals protocol seeks to bring NFTs to the Bitcoin network. And while the protocol initially spread like wildfire, with miner fees accounting for $170,500 on February 15th alone, it has since dropped in the weeks since to settle at its current level of $11,000.

Yuga Labs, the creators of the Bored Ape Yacht Club, is looking to breathe some life back into the project with its announcement for its own series of 300 Ordinals.

Our takeaway: Ordinals creator Casey Rodarmor admits that the lack of urgency in shipping out new features is what led to the drop in numbers. And he's also promised to correct this mistake. While the accountability is refreshing to see and, hopefully, will lead to genuine results, the interest from Yuga Labs also shows that Ordinals has been doing something right. Such high-profile interest is bound to be noticed and serve Ordinals well once the promised improvements are made to the protocol.

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Disclaimer: All price movements are recorded up to 03:30 PM UTC, 03rd March 2023

We saw all sectors ending the week with modest declines. The macroeconomic factors were its driving forces.

Crypto jargon of the week

Explain Like I'm 5

" Bid-Ask Spread "

The price you pay when you want to buy a stock is called the "bid" price, and the price you get when you want to sell a stock is called the "ask" price.

The gap between the lowest asking price and the highest bid price.

Example- The bid-ask spread is a good indicator of liquidity in the market