Monthly report of March 2023

This monthly report reviews the most important cryptocurrency news in March. In particular, the report delves into the rise of Bitcoin price and hashrate, measures taken by US authorities, Ethereum's upcoming Shanghai hard fork, Polygon's advancements, and MicroStrategy's bitcoin purchase.

              
March in the cryptocurrency market
March was a dichotomous month for cryptocurrencies. Of the cryptocurrencies offered by Northcrypto, the two largest cryptocurrencies by market cap were the most successful, namely Bitcoin and Ethereum. The price of Bitcoin was up nearly 20 percent, while the price of Ethereum surged around ten percent. The third cryptocurrency to rise in March was Chainlink, which ended up a couple of percents higher at the end of the month than at the beginning of the month. The prices of Aave, Litecoin and Polygon were down just under ten percent.
 
Bitcoin price and hashrate on the rise
Swiss bank Credit Suisse and several U.S. banks were in trouble in March. The problems of banks were also reflected in the prices of shares of several banks, many of which fell by as much as several dozen of percent in a short time. Credit Suisse, which managed some €1.3 trillion in assets, first had to be bailed out with the help of emergency funding from the Swiss National Bank. Subsequently, the largest Swiss bank, UBS, acquired Credit Suisse in part with the help of a loan offered by the Swiss National Bank.
 
Many, especially Bitcoin advocates, see banks' problems as a positive thing for Bitcoin, as they help people understand the benefits of a decentralized monetary system like Bitcoin. In addition to this, the way to respond to the banks’ problems, that is, in practice, the creation of additional money in the market, emphasizes the value of the rules of Bitcoin that are set in stone, such as the known issuance schedule and, consequently, the 21 million bitcoin maximum supply. It is precisely these things that may be the reason why Bitcoin stood out positively from several other cryptocurrencies and other investment instruments with its price movements in March.
 
Bitcoin hashrate has also been on a strong rise recently. Hashrate was already at nearly 400 ExaHashes per second (EH/s) at the end of March, according to blockchain analytics service Glassnode. As a benchmark, the hashrate was at the start of this year around 270 EH/s. Hashrate refers to the total computing power used by miners to maintain the Bitcoin network. There is a clear connection between hashrate and the security of Bitcoin: the higher the hashrate, the more secure the Bitcoin network can be considered.
 
Measures taken by US authorities against cryptocurrency players
U.S. cryptocurrency exchange Coinbase received a Wells notice from the U.S. Securities and Exchange Commission (SEC), which regulates the U.S. securities market. A Wells notice means advance notice of a possible filing of charges. According to current information, the potential actions will apply to, among other things, Coinbase's staking solution and cryptocurrencies listed by Coinbase, which may be classified as securities in the eyes of the SEC. Paul Grewal, Coinbase's chief legal officer, commented on the SEC's announcement as follows: " If needed, we welcome a legal process to provide the clarity we have been advocating for and to demonstrate that the SEC simply has not been fair or reasonable when it comes to its engagement on digital assets."
 
Another major regulatory action against the cryptocurrency player emerged from the U.S. in March. In March, the US Commodity Futures Trading Commission (CFTC) sued the world's largest cryptocurrency exchange in terms of trading volume, Binance, and the CEO of Binance, Changpeng Zhao. According to the lawsuit, Binance has, among other things, enabled US users to use the Binance platform without having to carry out proper customer due diligence processes. Binance is also accused of offering non-registered cryptocurrency derivative products in the US. On its website, Binance responded to the CFTC's lawsuit and stated, for example, that Binance does not agree with many of the issues raised in the lawsuit.
 
Ethereum Shanghai hard fork gets a date
Ethereum's long-awaited Shanghai hard fork, or upgrade, was given an exact event date in March. According to a Twitter post from Ethereum developer Tim Beiko, the Shanghai update will take place in GMT+2 time on April 13 shortly after the change of day. The Shanghai upgrade means Ethereum's final move to the Proof of Stake algorithm, as the upgrade will allow Ethereum's network validators to withdraw their staked tokens. Ethereum's network validators have been able to stake their ether tokens since the end of 2020. Currently, about 18 million ethers have been staked, which means about 15 percent of the ethers in circulation.
 
Polygon's zkEVM scalability solution and strategic collaboration with Web3 gaming company Immutable
The beta version of Polygon's zkEVM (zero-knowledge Ethereum Virtual Machine) mainnet was launched in late March. zkEVM is a layer-2 scalability solution powered by Ethereum, advanced both technologically and cryptographically, that aims to achieve transaction costs that are many times lower than Ethereum. Many consider Polygon's zkEVM to be one of the most significant technological developments in the cryptocurrency market this year.
 
In March, Polygon began a strategic collaboration with Web3 gaming company Immutable. The collaboration aims to accelerate the development of Web3 gaming and bring Web3 closer to large-scale adoption. In practice, the collaboration means the launch of Polygon's technology-powered Immutable zkEVM solution in the coming months. The purpose of Immutable zkEVM is to make Web3 game development faster, easier, and less risky for independent game developers and big game studios alike.
 
MicroStrategy bought more bitcoin
MicroStrategy, a US company offering business intelligence solutions, cloud-based services, and mobile software, bought more bitcoin. MicroStrategy announced in late March that it had bought bitcoin for around €140 million at an average price of just under €22,000. The company announced its first bitcoin purchase in August 2020, when the price of Bitcoin was around €10,000. Since then, MicroStrategy has bought bitcoin several times and since the last purchase, it owns around 139,000 bitcoins.
 
Summary
March was a very positive month for Bitcoin. Not only did the price of Bitcoin seem to stand out from the rest of the investment market after the banks' problems began, but the Bitcoin network was safer than ever before after the hashrate hit new record highs. The bitcoin purchase made by MicroStrategy can also be seen as a positive thing for Bitcoin. According to MicroStrategy’s actions and comments from the executive chairman of MicroStrategy, Michael Saylor, it appears that MicroStrategy has no intention of stopping increasing its bitcoin holdings.
 
The measures taken by US authorities against cryptocurrency operators this year have come as a bit of a surprise to many who follow the cryptocurrency market. On the other hand, for example, the SEC has been very critical of cryptocurrencies for a long time. At this stage, the future measures by the US authorities regarding the cryptocurrency market can only be guessed at. However, it is to be hoped that the goal of these actors will be to create an environment conducive to cryptocurrency innovation that is also favorable for both cryptocurrency players and investors.
 
Ethereum's long-awaited Shanghai hard fork is about a week away from when this monthly report is published. It will be interesting to see what kind of effects the possibility of withdrawing staked ethers has. Some believe that the possibility of withdrawing will increase selling pressure in the short term, while others see that the Shanghai hard fork will increase investors’ interest in Ethereum as it removes uncertainty. Ethereum-related news was also received from Polygon, which released a beta mainnet of the scalability solution Polygon zkEVM. Polygon also partnered with Immutable, one of the leading Web3 gaming companies. Both Polygon's zkEVM scalability solution and the strategic Immutable collaboration have the potential to enable Web3 to grow its popularity in the future.

Ville Viitaharju
Cryptocurrency specialist