Late March 2023 Crypto Boost

Bitcoin has enjoyed a strong run in March 2023 relative to the Crypto market as a whole. Bitcoin's dominance of the Crypto market has grown to 46% from 40%, however, 4% of that has come in past few weeks. Furthermore, its correlation to global markets has decreased rapidly in recent weeks returning to the Bitcoin of old that we are more familiar with. Since 2017, Bitcoin's correlation to the S&P has averaged 0.43, however, in 2022 this number peaked at its highest annual?average?of?0.6, and yet, in the past month it has averaged just 0.01 (i.e. no correlation at all).

Correlation is measured between 1 and -1. The value 0 corresponds with little to no correlation at all while the 1 and -1 one show strong positive and negative correlations, respectively.

The major driver of this?uncoupling can be linked to the "banking crisis" that has shook the global financial system in recent weeks which we covered in the previous Boost. Increasing interest rates are taking their toll on global banking balance sheets, and in turn, have had a couple of knock-on effects for Bitcoin which we've witnessed in the recent price action:

1) Impact of?increasing interest rates: the negative impact that rising interest rates has had on Bank balance sheets has led investors to believe the ability the FED has to continue to increase?interest rates has diminished significantly. Therefore, expectations of loosening of monetary policy sooner rather than later has driven inflation hedges like Bitcoin and Gold in recent weeks.

2) Secondly, for many depositors involved in the recent Bank runs in the US, the stark realisation that in fact deposits are a form of unsecured credit extensions to leveraged creditors rather than their hard earned money sitting waiting for them in vault under ground somewhere; has brought to the surface difficult?questions and the seeking out of alternative options.?

This environment clearly puts the FED in sticky?position, on the one hand, fighting stubbornly elevated inflation at the cost of a recession, and on the other, trying to prevent a small "banking crisis" breaking out into a more systemic situation. However, after last night's interest rate hike, it is clear the FED are not too concerned for Bank balance sheets at this stage and would like to see a further slowing down of the economy and inflation which it expects will be?spurred by local banks' lack of appetite to lend under current conditions. Time will tell.?

Of course, a "banking crisis" should be avoided at all costs, however, decentralised finance and crypto stand to benefit in any event. While in the short term we would agree that in a risk-off environment (which it would seem the FED are working to engineer) all asset prices do not do well, in the longer term both scenarios suit this new asset class.

If indeed the FED have over-shot the mark (hard landing) and banks fall into crisis and interest rates come hurtling back down, inflation hedges like Bitcoin do well. In the case of a "soft landing" risk-on assets like the Crypto as a whole do well.?

Fundamentally, the uncorrelated nature inherently built into the dynamics of this nascent decentralised financial industry coupled with its?asymmetric risk-return profile make its investment case ever stronger as the current state of global financial affairs lingers on.

In other news, a huge use-case has been brought to market this week. Telegram users can now transfer USDT through chats. These are massive steps toward making it easier for users to transfer value across globe using blockchain technology without necessarily know they are using it. It breaks down the barriers to adoption by lowering the complexities in the user experience.

Bitcoin Technical Outlook: The short term recovery we spoke about in the previous Boost came into fruition in a big way not long after we fired off our email. It has smashed through all the critical resistance levels on its way up as the fundamentals discussed above came to the forefront. $29.2k is a key resistance level which the market?seems to have missed given the interest hike announcement last night. The FED action?could well take?the bite out of?this strong upward momentum in the short term. All eyes fall back onto the economic indicators for the next few weeks. Volatile times ahead.

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Why SwissOne Capital?

SwissOne offers seamless access in to the Crypto Asset ecosystem via traditional market channels. Offering the Top 50?Crypto Assets momentum-weighted,?SwissOne brings you direct and sensible exposure to this uncorrelated and high growth asset class. Operating with institutional-grade?European financial service providers, there is a safe and secure passage from traditional markets into Crypto Assets.

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TOP RESEARCH &?ARTICLES

Coindesk:?Telegram Users Can Now Transfer USDT Through Chats

Bitcoin.com:?Trace Network Labs Launches PARIZ - World’s First Fully Functional Metaverse for Fashion and Lifestyle

Substack:?The Ultimate Guide to Tokenomics

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COIN FOCUS -??Optimism (OP?- $2.54;?ATH - $3.22)

WHY

Large ecosystems like Coinbase are faced with a difficult decision: they can deploy on Ethereum and forfeit scalability, choose a single L2 and be co-dependent on that ecosystem, or deploy and maintain their own chain and fragment liquidity and network effects.

But, what if we could have both the scalability of parallel chains and the composability of a single blockchain? What if all those chains shared an open source stack that prioritized decentralization, governance, security, and making constant improvements in tandem?

That is what Optimism is seeking to provide the industry.

WHAT

Optimism calls its solution the Superchain.?This?Superchain seeks to integrate otherwise siloed L2s into a single interoperable and composable system.

HOW

Recently, Coinbase joined the Optimism movement as both a core developer of the OP Stack codebase, and as a new L2 blockchain built on it, called Base.

As a chain, Base will commit a portion of transaction fee revenue back to an Optimism Collective treasury, furthering the vision for a sustainable future where Impact = Profit.

In the near term, this collaboration strives to upgrade Optimism Mainnet, Base, and other L2s to an initial Superchain structure, with shared bridging and sequencing.

In the long term, the Superchain can potentially expand?into a sprawling network which maximizes interoperability, shares decentralized protocols, and standardizes its core primitives–all while funding the public goods which enable it.

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