The crypto landscape is gearing up for an eventful week, marked by fundamental developments that could significantly influence market dynamics. From the cessation of the US Federal Reserve's Bank Term Financing Program (BTFP) to major upgrades and token unlocks, here are the five highlights to watch out for:
#1 The US Federal Reserve ends the BTFP
The US Federal Reserve's Bank Term Financing Program (BTFP) will stop issuing new loans starting March 11, 2024, marking the end of a critical chapter in the financial sector's response to the last year's banking collapses.
Introduced to stabilize the banking system by offering loans with high-quality collateral, the conclusion of the BTFP may have far-reaching implications for liquidity and lending practices.
“The cessation of the BTFP could cause a liquidity squeeze for banks, affecting their operations and profitability. However, the Federal Reserve's response, a possible easing of monetary policy, could cushion the blow and stabilize asset prices, benefiting bitcoin and the broader market.” bitcoin/bitcoin-crash-or-surge-fed-btfp-ends-in-5-days/” target=”_blank” rel=”noopener nofollow”>warns Cryptoanalyst Furkan Yildirim.
Echoing this sentiment, Arthur Hayes, co-founder of BitMEX, highlighted the importance of BTFP alongside other macroeconomic factors. He warned of a possible 30-40% correction in bitcoin prices due to the program's expiration, but held out hope for a rally in anticipation of the Federal Reserve's actions at its March 20 meeting. “This critical period could redefine market liquidity dynamics, offering a fundamental recovery opportunity for bitcoin,” Hayes suggested.
Tyler Reynolds, another crypto analyst, implied Given the potential for volatility, he commented: “While I anticipate that any turbulence coming from the end of the BTFP will be offset by the reintroduction of the program if necessary, the market should prepare for near-term fireworks.”
#2 bitcoin surpassing $70,000
bitcoin's recent flirtation with the $70,000 mark has sparked excitement within the crypto community, signaling a potential breakout. At press time, btc rose above $70,300, being on the brink of another big rally.
bitcoin Munger, a traditional financial portfolio manager, commented on the situation: “We will probably start the week with a bang, courtesy of short sellers getting squeezed to $70,000. New highs are approaching. TIC Tac!”
We are likely to start the week with a bang, courtesy of short sellers looking to get shorted to $70,000.
New highs are approaching. TIC Tac! bitcoin?src=hash&ref_src=twsrc%5Etfw” rel=”nofollow noopener” target=”_blank”>#bitcoin pic.twitter.com/OFiNmlmc9Y
–bitcoin Munger (@bitcoinmunger) March 10, 2024
WhalePanda, a renowned crypto analyst, criticized the skepticism surrounding bitcoin's rally. indicating, “Saylor's $700 million purchase and ETFs' $500 million daily purchases are overshadowing talk of a ceiling. We are on the cusp of the halving, and yet some are anticipating a pullback? Funny.”
Julio Moreno, head of research at CryptoQuant, added: “bitcoin accumulation by whales is skyrocketing. This excludes exchange and mining pool addresses,” indicating bullish sentiment among major players.
The growth of whales' bitcoin holdings is going parabolic.
Whales: bitcoin balance 1,000 to 10,000, excludes exchange and mining pool addresses. pic.twitter.com/KfWACLiIUR
— Julio Moreno (@jjcmoreno) March 7, 2024
#3 US inflation data
Financial markets are eagerly awaiting the release of the US Consumer Price Index (CPI) and Producer Price Index (PPI) for February, which will be released on March 12 and 14, respectively. These indicators are critical as they could influence the Federal Reserve's future monetary policy decisions.
February CPI data is expected to reveal a month-on-month rise in the core inflation rate of 0.3%, slightly below January's 0.4%. Year-over-year core inflation is expected to fall from 3.9% to 3.7%, providing insight into core inflation trends minus the volatile food and energy sectors.
The headline month-over-month inflation rate is projected at 0.4%, maintaining the year-over-year rate at 3.1%. This stability is critical to market sentiment and the Federal Reserve's interest rate strategy.
Additionally, the February Producer Price Index is forecast to register a 1.2% year-on-year increase, indicating potential upward price pressures that could impact consumer prices. This PPI data will be closely monitored as an early indicator of whether inflationary pressures are easing or persisting.
The outcome of these inflation reports could reignite concerns about the persistence of high interest rates or reinforce optimism about a dovish shift by the Federal Reserve, impacting investor sentiment in both traditional and cryptocurrency markets. .
#4 ethereum Dencun Update
The ethereum network will undergo a significant upgrade on March 13, known as the Dencun Upgrade, a combination of improvements aimed at improving the scalability and efficiency of the network and reducing transaction fees, particularly for Layer 2 solutions.
The Dencun upgrade is a combination of two key components: the introduction of Proto-Danksharding with EIP-4844 and several other ethereum Improvement (EIP) proposals. Proto-Danksharding, a major feature of this update, is designed to dramatically increase network data availability and reduce the costs of rollups, which are Layer 2 scalability solutions that help ethereum scale by handling outside transactions. of the main chain while ensuring security.
EIP-4844, specifically, proposes to introduce “blob bearer transactions” that enable the inclusion of large blobs of data in transactions at a significantly reduced cost. This innovation is expected to reduce fees for using ethereum, making it more accessible for a wider range of applications, including decentralized finance (DeFi) and non-fungible tokens (nft).
#5 Arbitrum (ARB): Biggest crypto Token Unlock of the Year
The crypto community is also considering the upcoming unlocking of 1.1 billion ARB tokens (worth $2.3 billion or 76% of the current market cap) on March 16, which could influence market dynamics. The significant increase in token supply has sparked debates over its impact on Arbitrum's market valuation and investor sentiment.
Jcycles crypto Analyst commented on the potential effects of the event: “ARB's breakout could mirror Solana's bullish response during its big breakout event. While results may vary, the market appears to have taken into account the implications of this unlock.”
At the time of publication, btc was trading at $70,886.
Featured image from Shutterstock, chart from TradingView.com
