Weekly Market Update - Friday, March 10, 2023

Welcome to our first Weekly Market Update.^* Explore weekly crypto price movements, read a quick digest of notable market news, and dive into a crypto topic — this week we’re discussing the roots of Ethereum.

Crypto Movers This Week (7D)

Bitcoin (BTC) | ⬇️ 9.83% | $20,152

Ether (ETH) | ⬇️ 9.02% | $1,427

Ren (REN) | ⬇️ 35.10% | $0.08311

Rally (RLY) | ⬇️ 32.50% | $0.01723

Synthetix (SNX) | ⬇️ 20.20% | $2.2402

Crypto prices as of Friday March 10, 2023, at 11:30am ET. Check out the latest crypto prices here.
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What Happened This Week?

Takeaways: Bitcoin (BTC) and ether (ETH) saw notable price declines this week, with Federal Reserve Chair Jerome Powell hinting at more interest rate hikes. Crypto bank Silvergate said it would close its doors and Silicon Valley Bank (SVB) is exploring a sale after its stock price plunged during the second half of the week.

Powell hints at more interest rate hikes: This week started off slowly following the conclusion of ETHDenver, with most crypto prices remaining range bound. However, this was short lived as during a hearing with U.S. lawmakers on Tuesday, Federal Reserve Chair Jerome Powell stated that the Fed may need to increase interest rates beyond what was originally anticipated, pointing to recent stronger-than-expected economic data.

Powell noted that the Fed is ready to take more significant actions, perhaps returning to larger rate increases to curb inflation if the data warrants it.¹ Last week, market participants were pricing in a 30% chance of a 50 basis points increase at the next Fed meeting on March 22, which has now shifted up to around 48%.²

Silvergate to shut its doors: Crypto faced further headwinds this week, with crypto bank Silvergate announcing on Wednesday that it will wind down its operations and liquidate the bank.³

This comes a week after the company reported it would not be able to file its annual 10-K report with the SEC on time while they assessed the viability of the business as well as suspending their Silvergate Exchange Network (SEN) payments platform. According to the liquidation plan shared by Silvergate, all deposits will be fully repaid.⁴ Their exit from the market is a blow to the industry and leaves only one other platform offering crypto firms U.S. banking access outside of regular banking hours — Signature Bank’s Signet platform.

Bank contagion may be gathering steam: On Thursday and Friday a bank catering to startups, Silicon Valley Bank (SVB), saw its share price slide 60% overnight before being halted on Friday morning.⁵

Some banks are increasingly in trouble due to a mismatch between riskier bets they placed (like buying long-term bonds) when interest rates were low, and the recent interest rate hikes from the Fed aimed at stemming inflation.⁶ Pair that with skittish investors who are increasingly withdrawing their deposits, and banks like SVB and Silvergate have been selling some of these risky investments at a loss, and marking down the value of these assets, given higher interest rates.⁷

Friday morning, it was also reported that SVB is in talks with potential buyers.⁸ Bottom line, it looks like a large timing mismatch and a run on a bank has rocked the banking sector.

-From the Gemini Trading Desk

Crypto Topic of the Week — Ethereum

On the heels of ETHDenver, today we explore the roots of the Ethereum network.

Who created Ethereum? Ethereum was originally proposed by Vitalik Buterin, a Russian-Canadian programmer who remains a de facto figurehead for Ethereum. Inspired by Bitcoin, Buterin released a whitepaper in 2013 describing an alternative blockchain network that would go beyond Bitcoin’s proposed financial use cases to allow developers to create their own decentralized applications (dApps) using a new programming language.

The open-ended aspirations enshrined in the Ethereum founder’s whitepaper created huge buzz among early crypto proponents, and soon after publication several talented developers reached out to Buterin to help bring his vision to life.

Who controls Ethereum now? Ethereum is an open-source blockchain platform built by hundreds of thousands of developers from around the world. Since Ethereum is a decentralized network, no single entity controls or owns it.

While Ethereum founders created the network’s initial infrastructure, a significant degree of control over the network has transitioned to users of the Ethereum community in the form of Ether (ETH) coins via its coin launch. Any crypto user who runs a network node or holds ETH has the ability to validate Ethereum’s transactions and secure the network. Decentralized by design, Ethereum’s success relies on the participation of its diverse community to function.

To learn more about Ethereum, check out this article exploring Ethereum use cases and this one that digs into decentralized social media networks built on Ethereum.

See you next week. Onward and Upward!

Team Gemini

^*This material is for informational purposes only and is not (i) an offer, or solicitation of an offer, to invest in, or to buy or sell, any interests or shares, or to participate in any investment or trading strategy, (ii) intended to provide accounting, legal, or tax advice, or investment recommendations, or (iii) an official statement of Gemini. Gemini, its affiliates and its employees do not make any representation or warranty, expressed or implied, as to accuracy or completeness of the information or any other information transmitted or made available. Buying, selling, and trading cryptocurrency involves risks, including the risk of losing all of the invested amount. Recipients should consult their advisors before making any investment decision. Any use, review, retransmission, distribution, or reproduction of these materials, in whole or in part, is strictly prohibited in any form without the express written approval of Gemini.

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¹ https://www.c-span.org/video/?526389-1/fed-chair-powell-warns-aggressive-rate-hikes-address-inflation

² https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html (as of 11am ET on Friday March 10, 2023)

³ https://www.cnbc.com/2023/03/08/silvergate-shutting-down-operations-and-liquidating-bank.html

⁴ https://www.cnbc.com/2023/03/02/silvergate-capital-shares-crater-after-the-crypto-bank-delays-annual-report.html

⁵ https://www.cnbc.com/2023/03/10/silicon-valley-bank-tumbles-for-a-second-day-weighing-on-the-bank-sector-again.html

⁶ https://www.axios.com/2023/03/10/behind-silicon-valley-banks-sudden-rush-for-cash

⁷ https://www.axios.com/2023/03/10/behind-silicon-valley-banks-sudden-rush-for-cash

⁸ https://www.cnbc.com/2023/03/10/silicon-valley-bank-financial-in-talks-to-sell-itself-after-attempts-to-raise-capital-have-failed-sources-say.html