Interpretation of cryptocurrency market on March 10th, 2023
The market saw a significant drop last night. And mainstream tokens such as BTC and ETH led the decline, while the smaller tokens were a bit stronger.
This decline is a black swan event. After the silver gate, which is more involved in the crypto space, announced its liquidation, Silicon Valley Bank made another negative announcement last night, announcing the sale of its securities holdings at a loss and seeking financing to solve the liquidity problem caused by withdrawal needs. As a result of this, Silicon Valley Bank plunged 60%. U.S. banks are releasing water to increase their holdings of U.S. debt during the epidemic. As U.S. bond yields rise, the coupon value is constantly declining. At this point, if you encounter liquidity problems must sell and will bear the double blow of falling deposits and coupon impairment. And the market is concerned that more than just Silicon Valley Bank has a liquidity crisis, triggering a sell-off of the entire banking sector. The four largest U.S. banks have plunged, with market value evaporating more than 50 billion.
The impact of excessive interest rate hikes is already beginning to show. Just as much inflation has not yet fallen, the smaller banks' risk resistance has been almost impossible to carry. Silicon Valley Bank is small and has a relatively single-asset portfolio. That is similar to Henan Commercial Bank and does not represent other larger banks with the same problems. But it is a timely reminder to the Fed. Continuing to raise interest rates sharply may bring about economic recession and trigger systemic risk in the U.S. financial sector.
The strategy for dealing with the 21,000 drop-through has long been clear. Most of the long-term positions were laid out at the end of last year. At present, profit retraction is just a short-term need to stop and wait and see. Strong trading ability can consider opening a short hedge not more significant than the long-term position to avoid small probability events. But shorting at the moment is equivalent to placing a bet for subsequent systemic risk. For most ordinary traders, it is more appropriate to ignore small probability events and ignore them.
This decline is a black swan event. After the silver gate, which is more involved in the crypto space, announced its liquidation, Silicon Valley Bank made another negative announcement last night, announcing the sale of its securities holdings at a loss and seeking financing to solve the liquidity problem caused by withdrawal needs. As a result of this, Silicon Valley Bank plunged 60%. U.S. banks are releasing water to increase their holdings of U.S. debt during the epidemic. As U.S. bond yields rise, the coupon value is constantly declining. At this point, if you encounter liquidity problems must sell and will bear the double blow of falling deposits and coupon impairment. And the market is concerned that more than just Silicon Valley Bank has a liquidity crisis, triggering a sell-off of the entire banking sector. The four largest U.S. banks have plunged, with market value evaporating more than 50 billion.
The impact of excessive interest rate hikes is already beginning to show. Just as much inflation has not yet fallen, the smaller banks' risk resistance has been almost impossible to carry. Silicon Valley Bank is small and has a relatively single-asset portfolio. That is similar to Henan Commercial Bank and does not represent other larger banks with the same problems. But it is a timely reminder to the Fed. Continuing to raise interest rates sharply may bring about economic recession and trigger systemic risk in the U.S. financial sector.
The strategy for dealing with the 21,000 drop-through has long been clear. Most of the long-term positions were laid out at the end of last year. At present, profit retraction is just a short-term need to stop and wait and see. Strong trading ability can consider opening a short hedge not more significant than the long-term position to avoid small probability events. But shorting at the moment is equivalent to placing a bet for subsequent systemic risk. For most ordinary traders, it is more appropriate to ignore small probability events and ignore them.
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