Need to Know: Bitcoin has been boosted by the banking crisis — and these two other factors, says JPMorgan strategist

“For crypto supporters, the U.S. banking crisis exposed the weaknesses of the traditional financial system given banks’ maturity mismatch is susceptible to bank runs,” says Nikolaos Panigirtzoglou, global market strategist at JPMorgan. “Crypto supporters have been arguing for a long time that the crypto ecosystem is superior not least because deposits are held in entities such as stablecoins which as a digital form of money market funds are 100% backed with high quality liquid assets and are thus less susceptible to runs.”

But Panigirtzoglou also notes two other supports, which aren’t as well known. He talks about the launch of bitcoin ordinals, which enable non-fungible tokens, or NFTs, directly on the bitcoin network. “This is because metadata such as text, images can be inscribed on the bitcoin network itself, without relying on smart contracts as seen with other blockchains, where NFTs are created through smart contracts,” he says. If there’s a boom similar to the last NFT bull run, then transaction fees could be driven higher, which would increase miners’ revenue.

And he looks ahead to an event next year — in April 2024, when bitcoin will be halved, as happens once every four years. Like stock splits, it can have a positive impact despite not really changing anything. “While this is some way away ceteris paribus, this would mechanically double bitcoin’s production cost to around $40k, creating a positive psychological effect. This is because bitcoin’s production cost has historically acted as an effective lower bound,” he says.

The previous halving events, in 2016 and 2020, were accompanied by a bullish trajectory afterwards.

The market

U.S. stock futures were mixed, with Dow futures
YM00,
+0.05%
slightly higher while the Nasdaq 100 contract
NQ00,
-0.19%
was lower. The yield on the 10-year Treasury
TMUBMUSD10Y,
3.286%
was down for a seventh straight session.

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The buzz

Weekly jobless claims are due for release, the last indicator before the nonfarm payrolls report on Friday, when stock markets will be shut for the Good Friday holiday.

A judge denied an attempt to quicken the resolution of a shareholder fight over AMC Entertainment’s
AMC,
+3.58%
ability to convert its so-called APE
APE,
+1.79%
shares into regular shares.

Costco Wholesale
COST,
-0.12%
reported its first monthly same-store sales drop in nearly three years.

The U.K. competition regulator said it’s considering whether Amazon.com’s
AMZN,
-2.74%
$1.7 billion deal to buy iRobot
IRBT,
-1.04%
will lessen competition, a step before commencing a formal investigation.

French President Emmanuel Macron visited China and met Xi Jinping, while at home, protests over his plan to lift the retirement age by two years continued.

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The chart

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