Crypto News: Market Update March 2024
March was marked by the Dencun upgrade on the Ethereum network and the second interest rate decision of 2024. The successful implementation of the Dencun upgrade promises positive effects on both monetary policy and Ethereum’s scalability. During the Fed’s interest rate decision, rates were kept unchanged, but Chair Jerome Powell forecasted three rate cuts by the end of the year, despite persistent inflation. The approaching conclusion of the legal case between Ripple and the SEC, with the SEC demanding $2 billion in remedies, also looms. Below are several key financial events highlighted from March.
March 1: IBIT Bitcoin ETF Becomes Fastest ETF to Reach $10 Billion in Assets Under Management
BlackRock’s Bitcoin Exchange-Traded Fund (ETF), IBIT, has achieved a remarkable feat by amassing over $10 billion in assets under management within just seven trading weeks. This accomplishment establishes IBIT as the fastest-growing fund ever to join the exclusive ’10 Billion Dollar Club.’ Since its launch on January 11, IBIT has emerged as the most successful newcomer among Bitcoin spot ETFs, drawing substantial capital flows into the fund daily. With a portfolio of over 162,000 bitcoins, BlackRock has gained a significant lead over other recently launched Bitcoin ETFs, including those from Fidelity and ARK Invest. The recent record inflow into IBIT has even partially offset the significant outflow from Grayscale’s GBTC. (Source: Crypto Insiders)
March 12: CPI Data Come in Higher Than Expected
Consumer prices rose by 0.4% in February compared to the previous year, according to the Bureau of Labor Statistics. The core CPI, which excludes food and energy, also increased by 0.4%. These figures are above expectations and signal persistent inflation. The rise was primarily driven by a 2.3% increase in energy costs, while food prices remained stable. The Federal Reserve is likely to hold off on interest rate cuts until summer. Although the economy continues to grow, high inflation remains a concern. (Source: CNBC)
March 13: Ethereum’s Dencun Upgrade Successfully Implemented
The recent Dencun upgrade for Ethereum reduces costs for Layer-2 solutions and limits the number of new validators, positively impacting Ethereum’s monetary policy. The upgrade expands data storage capacity and lowers transaction costs for roll-ups. Roll-ups enable the blockchain to process more transactions by executing them externally. This allows for large volumes of transactions to be aggregated and processed with less strain on the Ethereum mainnet. These developments align with Ethereum’s goal of slowing the supply growth and focusing on scalability. (Source: Glassnode)
March 20: Interest rates remain unchanged during the Fed’s March 2024 rate decision
The Federal Reserve kept interest rates unchanged as expected and indicated that there will be multiple rate cuts before the end of the year.
After the two-day policy meeting, the Federal Open Market Committee (FOMC) announced that it would maintain the benchmark overnight interest rate between 5.25% and 5.5%. At the same time, Fed officials have penciled in three quarter-point rate cuts by the end of 2024, which would be the first cuts since the start of the Covid pandemic in March 2020.
The current interest rate is the highest in over 23 years. The committee also anticipates three rate cuts in 2025 and three more in 2026, until the federal funds rate stabilizes around 2.6%. This decision was unanimously approved and led to a positive market reaction, with rising stock prices and lower yields on government bonds. Fed Chair Jerome Powell confirmed that there had been discussions about slowing the reduction of the Fed’s balance sheet, but no definitive decisions have been made yet. (Bron: CNBC)
March 21: BlackRock launches its first tokenized fund, BUIDL, on the Ethereum network.
BlackRock has launched its first tokenized fund, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), on the Ethereum blockchain. This fund allows qualified investors to earn returns in U.S. dollars by participating through Securitize Markets, LLC.
Tokenization allows investors to benefit from advantages such as efficient issuance and trading of ownership on the blockchain, broader access to on-chain offerings, and fast and transparent settlements. (Bron: Business Wire)
March 22: SEC reveals $2 billion fine demand in the lawsuit against Ripple
On Monday, the SEC revealed that it is demanding a $2 billion fine in the ongoing case against Ripple. Ripple’s Chief Legal Officer, Stuart Alderoty, criticized the SEC for its alleged misleading statements. Despite the SEC’s demand, U.S. case law suggests a lower penalty given the absence of fraud or recklessness allegations. Ripple may leverage previous cases such as SEC v. Govil and Liu v. SEC to argue for a reduced fine. Post-complaint activities remain relevant, as the SEC may impose punitive measures if Ripple continues to violate the Securities Act. Judge Sarah Netburn has emphasized that post-complaint activities will influence the final penalties. Ripple has until April 22 to respond. (Bron: NASDAQ)
March 28: GDP data comes in higher than expected.
The U.S. economy grew faster than previously estimated in the fourth quarter, driven by strong consumer spending and business investments. Corporate profits also increased, and the economy remains robust despite concerns about a potential recession. Gross Domestic Product (GDP) rose by a revised 3.4% last quarter, while core inflation was adjusted to 2.0%. Initial claims for unemployment benefits decreased, indicating better balance in the labor market, while continuing claims remained stable, suggesting stability and easing wage pressures. (Bron: Reuters)
March 28: FTX founder Sam Bankman-Fried sentenced to 25 years in prison
FTX founder Sam Bankman-Fried has been sentenced to 25 years in prison for large-scale fraud that led to the collapse of his cryptocurrency exchange (FTX) and hedge fund, Alameda Research. He is also ordered to pay $11 billion in fines. While this is less than the 40 to 50 years sought by prosecutors, it is significantly more than the 5 to 6.5 years proposed by his defense attorneys. Bankman-Fried claimed that the customer losses were due to a “liquidity crisis” or “poor management,” but prosecutors argued that they resulted from “theft” of billions of dollars in customer funds worldwide (Bron: CNBC)
March 29: Core PCE Index data comes in as expected.
In February, prices in the U.S. increased minimally, keeping a Federal Reserve rate cut in June on the table. The Personal Consumption Expenditures (PCE) price index rose by 0.3% last month, according to the Bureau of Economic Analysis. Over the 12 months leading up to February, PCE inflation increased by 2.5%, up from 2.4% in January. Core inflation rose by 2.8% year-over-year in February, down from 2.9% in January. Additionally, the S&P 500 posted its strongest performance in the first quarter in five years. (Bron: Reuters)
Conclusion
The key financial events of March 2024 included the successful implementation of the Dencun upgrade on the Ethereum network, the Federal Reserve’s announcement of multiple rate cuts for the end of 2024, and the fine demand in the ongoing lawsuit between Ripple and the SEC. The rapid growth of the IBIT Bitcoin ETF also drew attention. Additionally, BlackRock launched its first tokenized fund, BUIDL, on the Ethereum network. Lastly, the economy remained robust in March, with investors and analysts closely monitoring inflation concerns.
