Top 5 Highlights To Watch

The crypto landscape is gearing up for an eventful week, marked by pivotal developments that could significantly influence market dynamics. From the cessation of the US Federal Reserve’s Bank Term Funding Program (BTFP) to major upgrades and token unlocks, here are the top five highlights to keep an eye on:

#1 US Fed Ends BTFP

The US Federal Reserve’s Bank Term Funding Program (BTFP) is set to cease issuing new loans starting March 11, 2024, marking the end of a pivotal chapter in the financial sector’s response to last year’s bank collapses.

Introduced to stabilize the banking system by offering loans against high-quality collateral, the BTFP’s conclusion may have far-reaching implications for liquidity and lending practices.

“The cessation of the BTFP could lead to tightened liquidity for banks, affecting their operations and profitability. However, the Fed’s response, potentially easing monetary policy, might cushion the blow and stabilize asset prices, benefiting Bitcoin and the broader market,” warns crypto analyst Furkan Yildirim.

Echoing this sentiment, Arthur Hayes, BitMEX co-founder, highlighted the BTFP’s significance alongside other macroeconomic factors. He warned of a possible 30-40% correction in Bitcoin prices due to the program’s expiry but remained hopeful for a rebound in anticipation of the Fed’s actions at their March 20 meeting. “This critical period could redefine market liquidity dynamics, offering a pivotal rebound opportunity for Bitcoin,” Hayes suggested.

Tyler Reynolds, another crypto analyst, hinted at the potential for volatility, remarking, “While I anticipate any turbulence from the BTFP’s end to be countered by the program’s reintroduction if necessary, the market should brace for short-term fireworks.”

#2 Bitcoin Breaking Above $70,000

Bitcoin’s recent flirtation with the $70,000 mark has stirred excitement within the crypto community, signaling a possible breakout. At press time, BTC rose above $70,300, being on the verge of another major rally.
Bitcoin Munger, a traditional finance portfolio manager, commented on the situation: “We likely start the week off with a bang, courtesy of short sellers getting squeezed at $70k. New highs are incoming. Tick tock!”

We likely start the week off with a bang, courtesy of the short sellers looking to get squeezed at $70k.

New highs are incoming. Tick tock! #bitcoin pic.twitter.com/OFiNmlmc9Y

— Bitcoin Munger (@bitcoinmunger) March 10, 2024

WhalePanda, a renowned crypto analyst, criticized the skepticism surrounding Bitcoin’s rally, stating, “Saylor’s $700 million buy-in and ETFs’ $500 million daily purchases are overshadowing talks of a top. We’re on the cusp of the halving, and yet, some anticipate a pullback? Laughable.”

Julio Moreno, head of research at CryptoQuant, added, “The accumulation of Bitcoin by whales is skyrocketing. This is excluding exchange and mining pool addresses,” which indicates a bullish sentiment among major players.

The growth of whale’s Bitcoin holdings is going parabolic.

Whales: 1k-10K Bitcoin balance, excludes exchange and mining pool addresses. pic.twitter.com/KfWACLiIUR

— Julio Moreno (@jjcmoreno) March 7, 2024

#3 US Inflation Data

The financial markets are keenly awaiting the release of the US Consumer Price Index (CPI) and Producer Price Index (PPI) for February, due on March 12 and 14, respectively. These indicators are critical as they could sway the Federal Reserve’s future monetary policy decisions.

February’s CPI data is anticipated to reveal a month-over-month Core Inflation Rate increase of 0.3%, slightly below January’s 0.4%. The year-over-year core inflation is expected to dip to 3.7% from 3.9%, offering insights into underlying inflation trends minus the volatile food and energy sectors.

The overall Inflation Rate month-over-month is projected at 0.4%, maintaining the year-over-year rate at 3.1%. This stability is pivotal for market sentiment and the Fed’s interest rate strategy.

Additionally, the Producer Price Index for February is forecasted at a year-over-year increase of 1.2%, indicating potential upstream price pressures that might trickle down to 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 either reignite concerns over continued high-interest rates or bolster optimism for a dovish shift by the Fed, impacting investor sentiment across both traditional and cryptocurrency markets.

#4 Ethereum Dencun Upgrade

The Ethereum network is set to undergo a significant upgrade on March 13, known as the Dencun Upgrade, a combination of improvements aimed at enhancing network scalability, efficiency, and reducing transaction fees, particularly for Layer 2 solutions.

The Dencun Upgrade is a blend of two key components: the introduction of Proto-Danksharding with EIP-4844 and several other Ethereum Improvement Proposals (EIPs). Proto-Danksharding, a major feature of this upgrade, is designed to drastically increase the network’s data availability and reduce costs for rollups, which are Layer 2 scalability solutions that help Ethereum scale by handling transactions off the main chain while still ensuring security.

EIP-4844, specifically, proposes to introduce “blob-carrying transactions” which allow for the inclusion of large data blobs in transactions at a significantly reduced cost. This innovation is expected to lower the fees for using Ethereum, making it more accessible for a wider range of applications, including decentralized finance (DeFi) and non-fungible tokens (NFTs).

#5 Arbitrum (ARB): Largest Crypto Token Unlock Of The Year

The crypto community is also eyeing the upcoming unlock of 1.1 billion ARB tokens (worth $2.3 billion or 76% of the current market cap) on March 16, which could sway market dynamics. The significant increase in token supply has prompted debates regarding its impact on Arbitrum’s market valuation and investor sentiment.

Crypto analyst Jcycles remarked on the event’s potential effects: “The ARB unlock could mirror Solana’s bullish response during its large unlock event. While outcomes may vary, the market seems to have already factored in the implications of this unlock.”

At press time, BTC traded at $70,886.

Featured image from Shutterstock, chart from TradingView.com