[Daily] The banking crisis pain deepens

Good morning! Welcome to The Daily Moon. There is a lot of excitement around ARB and its airdrop the day after tomorrow, but with this comes a risk of con artists and scamsters. The Ethereum community has warned investors to verify websites and Twitter accounts before connecting wallets. The community has discovered one very legitimate-looking website and they’re sure there are others around.

As of Monday, 7PM IST

Crypto markets were in the green as the rally sparked by the banking crisis continued. Bitcoin gained as investors warmed up to crypto. Ethereum was bullish on Microsoft testing an ETH wallet in its Edge browser. S&P 500 and Nasdaq moved in opposite directions even as contagion risks of SVB's collapse remained. Back home, Sensex and Nifty ended lower as the global banking industry turmoil dented investor confidence.

Bitcoin Is Living The Dream

Bitcoin has been surging since the banking crisis began. All the rants on Twitter and the boring gesticulated ramblings of crypto bros are coming to life and the market is loving it. Let’s get the headline numbers for you. Bitcoin in the past four days is up ~15% and continues to trend upwards.

Why?The small and mid-sized banks in the US and Europe are struggling to deal with a flush of withdrawals. This has caused two banks to go under and a hurried sale for another. This meant three things:

1. Customers moved to larger established banks.

2. Bank stocks fell in trading over the past week.

3. People needed a safe place to park their money.

Because of this, the decentralised nature of Bitcoin and its non-reliance on the banks shone through the haze of discontent and fear. Money rushed there, and that’s why we’ve seen the market cap of Bitcoin grow 60% in 2023.

What now?For now, investors are vibing with the surge, but there are signs of caution.

1. There is no guarantee that regulators and banks will continue to process crypto transactions.

2. Some Bitcoin HODLers are now beginning to see that a profit can be booked and have started to sell.

3. Sentiment, however, remains positive and investors are seemingly content with buying more and holding. But these things change. Fast.

Be cautious but celebrate that we’re seeing the mainstreaming of crypto.

ADA Can’t Shake Off The Bad Feeling

ADA is up. So are Ethereum, XRP, and Solana. The banking crisis in the US has encouraged interest in altcoins. But there’s something you need to know about ADA. As the headline suggests, ADA is going through a bit of a tough spot. Let’s break it down.

What is wrong?How does ADA make money? Through fees. The more the number of transactions on the network, the more money it makes. So, if transactions dip, the revenue dips. Simple correlation? Now, there was a 36% decline in transaction fees on the network in the last quarter of 2022. This resulted in a drop in revenue of about 28%. Sure, some of this directly results from the collapse of FTX, but declining interest in NFTs on the network raises questions.

NFTs have been hot for the past quarter, thanks to Ordinals and Yuga Labs inscribing their NFTs on Satoshis.

The Banks Need Saving

The banking crisis has a few new chapters written on it over the weekend. Let’s chart some of them out for you.

UBS buys Credit SuisseThis is a big one. Over the weekend, UBS announced it was buying Credit Suisse for less than half its Friday valuation. The deal is worth $3.25 billion. The Swiss government made special provisions to make it happen.

ICYMI: The Swiss government bailed UBS out in the 2007 Lehman Brothers collapse.

Finally, things move on Signature, SVBSignature Bank has found a new home for its loans and deposits. Flagstar Bank, a unit of New York Community Bancorp. Crypto, however, has been left out of the deal. The 40 branches of Signature Bank will open with the name of the acquirer as early as Monday. Crypto deposits will be directly transferred to customers.

Meanwhile, Silicon Valley Bank UK is celebrating its takeover by HSBC. By issuing $15 million in bonuses. It’s retaining key staff and to show appreciation for the talent base. Well, interesting times.

According to reports, there are about 200 banks now at risk in the US alone. Asia, however, may not be affected by this mania.

No Cloud Cover

This is about a cyber theft that is slightly different. Mainly because it is a little more, let’s say, basic. A security vulnerability hit bitcoin ATM manufacturer General Bytes on Friday. And it shut its cloud services to prevent further damage.

Like a bad virus fileIt sounds similar to how viruses would get installed on computers through websites. Someone uploaded a Java application to General Bytes’ main software. And this malicious software could steal user information from hot wallets. This, in turn, was used to steal actual Bitcoin.

FYI Hot wallet is a term for crypto wallets that are connected to the internet.

So what’s the damage?The company hasn’t given an estimate. But on-chain data shows about 56 BTC was lost. That’s about $1.54 million at current prices. General Bytes has asked ATM operators to install their own servers.

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Who are we? This newsletter’s ambition is to educate (and to entertain). The world of money is changing everyday and we want to help you decode what’s happening in the world of crypto, public markets in the US and India.