BTC stuck at $22.4K as market awaits Powell’s comments

by James · March 6, 2023

BTC stuck at .4K as market awaits Powell’s comments

Crypto Flat as Powell Heads to Congress

Good morning Asia, here’s how the markets are moving today.

Bitcoin and ether open Asia Business day flat. The world’s largest digital asset is down 0.2% at $22,412 while ether is steady at $1,565.

Trading volume is down significantly, according to CoinGecko data, with 24-hour bitcoin volume at $16 billion on Monday, March 6, compared to $27 billion on Friday, March 3. March.

A report from CryptoQuant points to funding rates and argues that the current market is bearish and bets on further decline.

“I don’t think we’re out of the woods yet, it’s clear that inflation is still widespread and here,” Hany Rashwan, CEO of crypto investment products firm 21.co, said on CoinDesk TV. “How much the market has priced it in right now is hard to tell.”

All eyes are likely to be on Fed Chairman Jerome Powell when he heads to Congress to testify Tuesday morning before the Senate Banking Committee and Wednesday before the House Financial Services panel.

Powell is in a bind, as the economy seems resistant to the chilling effects of interest rate hikes.

January’s blowout jobs numbers, in which the U.S. added nearly three times as many jobs as expected, showed observers that the Fed has some work to do to bring down inflation.

CME’s FedWatch tool gives a 69% chance of a 25 basis point increase, and a 30% chance of a 50 basis point increase. Prediction market PolyMarket shows an 80% chance of a 25 bps increase during the March meeting and a 23% chance of a 50 bps increase after.

Filecoins China, Cost Woes

Filecoin has a market capitalization of just over $2.4 billion, and has a storage capacity of more than 13.41 exabytes (1 exabyte equals 1 million terabytes). Of these 13.41 exabytes, 626 petabytes are currently used (1 petabyte is 1000 terabytes).

The $2.4 billion question is what is stored in those 626 petabytes?

On the one hand, it is easy to answer. When asked, the Filecoin Foundation is quick to provide a table listing some high-profile customers:

A Protocol Labs spokesperson also highlighted that NFT marketplace OpenSea stores the metadata for its NFTs on Filecoin. Important, yes, for the continuity of the NFT industry in the face of disasters, but not exactly something that requires a lot of storage.

Filecoin’s centralization in China

There is no doubt that the Filecoin protocol is being used and the demand for storage is increasing.

On-chain data shows that the daily active Filecoin offers are increasing.

But perhaps the reason you don’t see a large number of actual enterprise customers using Filecoin – and only scientific data repositories and proof-of-concept initiatives – is because of Filecoin’s heavy exposure to China.

Bella Yang, a research manager with IDC China’s enterprise research team, told CoinDesk in a note that Filecoin miners purchased large numbers of storage servers known as JBODs. These are straightforward arrays of HDDs designed to rapidly scale a company’s ability to archive data.

“During this time, a large number of JBOD products were sold directly to mining companies and the prices of high-capacity HDDs began to rise, even driving many out of stock when there was a shortage of 8 terabyte-plus HDDs is,” Yang said. which explains that the Filecoin-induced demand for HDDs came when COVID shut down factories in China.

Although bitcoin mining has largely left China, and ether mining has become redundant with the merger, Filecoin miners still have a large presence in the country.

“The fact that the main miners are linked to cloud storage companies highlights that Filecoin is far from concrete decentralized market storage because these companies dominate the storage market and monopolize mining,” the authors wrote.

Filecoin knows that the market is skeptical

For Filecoin, the answer to the woes is Filecoin Plus (FIL+), which seeks to separate quality storage providers from those polluting the protocol with junk data as many miners in China did in the early days of the protocol.

Data from Token Terminal shows that revenues and for the protocol have imploded over the past year despite more use of the protocol. In February, heavy incentives meant earnings were net negative at $43.4 million on revenue of $1.2 million.

“What I think is going to be the most important thing to watch is if storage demand can still keep up when storing data is no longer free,” Messari enterprise analyst Sami Kassab previously told CoinDesk.

Silvergate Bank, which last week warned about its ability to remain in business, discontinued its SEN platform that institutions used to move money to crypto exchanges. 21.co co-founder and CEO Hany Rashwan shared his crypto market reaction after bitcoin’s (BTC) price was little changed over the weekend. And Puerto Rico has extended its 4% tax incentive to crypto-assets and blockchain activities, including staking. Puerto Rico Blockchain Trade Association’s Keiko Yoshino joined the conversation.