Uncle Yu’s blockchain weekly report brings you a summary of the information of the week.
Time: March 12-19
This week's keywords: SVB, Federal Reserve
This week's big events
The U.S. Treasury Department provides up to $25 billion to support the Federal Reserve's emergency bank term funding program;
The Federal Reserve announced that SVB depositors could get their money back and that SVB's losses would not be borne by taxpayers;
Signature Bank was shut down by New York State financial regulators;
After the Fed spoke, market confidence recovered, USDC gradually became pegged to the US dollar, and the crypto market saw a sharp rebound in the short term;
The First Republic Bank suffered a run;
The probability of the Federal Reserve raising interest rates by 25 basis points in March has increased to 75%;
Stargate stopped issuing new STGs;
Euler Finance was attacked;
Arbitrum launched an airdrop.
Uncle Yu's Market View
When USDC decoupled last week, I said, “USDC is not Terra, there is no death spiral,” so my action was to buy USDC at a low price.
Regarding the SVB issue, the Federal Reserve responded quickly and directly allowed National Insurance to acquire it, changing its laissez-faire attitude at the beginning of the 2008 financial crisis.
It is interesting to note that the US Treasury Department said at the weekend that it would not rescue the market, but on Monday the Federal Reserve directly slapped it in the face and said it would "ensure depositors' funds." Therefore, the entire market also took a deep V curve.
The Federal Reserve protects depositors' funds but does not protect the wealth of capitalists. This is a good move by the Federal Reserve. On the one hand, it is used to ease the pressure of bank runs, and on the other hand, it tells the market that SVB's stock trend has nothing to do with me. In fact, it also indirectly reflects the Federal Reserve's principle of neutrality and non-direct intervention in the capital market.
Along with SVB's problems, the risks of the banking industry have gradually begun to spread. For example, First Republic Bank and Credit Suisse in the United States have been sold off one after another. It cannot be said that there is an inevitable connection between them, but it can be clearly seen that "the aggressive interest rate hike strategy has begun to show its drawbacks."
Looking back at the market trends this month, you will find that since the US employment situation has improved and Powell made hawkish remarks, various thunderstorms have emerged one after another, and the 50% rate hike predicted at the beginning of the month has gradually turned into no rate hike this month, which shows that "the current market is at the critical point of reducing inflation." For Powell, how to gently pass this critical point and let the economy land smoothly will be a great test.
In my opinion, the current aggressive rate hike is "extremely dangerous" and the best way is to continue to maintain a 25% rate hike.