The market capitalization of all cryptocurrencies is back above the $1 trillion mark.
After a joint statement from the Federal Reserve, US Treasury and FDIC stated that all depositors are now closed Silicon Valley Bank and Signature Bank will be able to pull their money out on Monday, the battered crypto market turned green.
Late Sunday night, Bitcoin (BTC) stood at $22,300 and Ethereum (ETH) at $1,596, both up about 8% in the past 24 hours, according to CoinMarketCap price data.
Top-30 coins Cardano (ADA), Polygon (MATIC), Solana (SOL), Litecoin (LTC), Avalanche (AVAX), and Filecoin (FIL) all rose more than 10% as well.
Conversely, the news appeared to spark hesitation in traditional financial markets, with the US dollar slumping early in Monday trading.
US Dollar Coin (USDC), the No. 2 stablecoin in the market, regained its dollar peg and returned to a price of 99.3 cents across multiple price indices. USDC had fallen to a new low of 87 cents Friday night after USDC issuer Circle announced it still had $3.3 billion of USDC’s backing cash reserves in Silicon Valley Bank.
The weekend’s slump shook confidence in USDC and other stablecoins like USDD and USDP and cast doubts on the viability of stablecoins in general. It is not yet certain that those doubts have been dispelled just because USDC has recovered.
The current banking chaos and contagion arguably started barely more than a week ago when the crypto-friendly Silvergate Bank showed signs of trouble. After numerous crypto companies that used Silvergate (including Coinbase, Galaxy, Gemini, and Crypto.com) said they would stop using it, Silvergate shut down its Silvergate Exchange Network. By Wednesday, Silvergate said it would wind down its business.
Just two days later, on Friday, the Nasdaq halted trading in Silicon Valley Bank, which experienced a $42 billion bank run the previous day and was reportedly seeking an emergency takeover. Within hours, regulators had shut down SVB, taking a dramatic blow to banking and technology stocks amid fears that other regional banks would be in trouble. Several crypto and tech startups publicly announced whether they had money in SVB. Subsequently, New York State financial regulators abruptly shut down Signature Bank on Sunday, citing systemic risk.
Finally, Sunday night’s announcement of help from the Fed, Treasury and FDIC appears to have stemmed the bleeding in crypto and stocks for now: S&P and Nasdaq futures surged in pre-market trading.
Leave a Reply