Amid the US government’s promise to protect depositors of bankrupt Silicon Valley Bank and Signature Bank, cryptocurrency prices rose, with Bitcoin rising above $24,000 and Ethereum at $1,680. The cryptocurrency market capitalization increased by about 14% in one day and exceeded $1 trillion on Monday.
On March 9-10, a sharp decline was recorded in the cryptocurrency market. The price of Bitcoin fell to $20,000, Ethereum—about $1,430. This came amid the closure of three major US banks—Silicon Valley Bank, Signature Bank, and Silvergate Capital—and a slump in US financial sector stocks.
On March 12, however, the US Federal Reserve system announced that Silicon Valley Bank depositors—both insured and uninsured—would receive relief that would fully protect their deposits.
Many experts feared that the bankruptcy of these major US banks could lead to a so-called financial contagion, which implies a chain reaction of financial shocks and the bankruptcy of other credit institutions. Today, according to experts, the risk of the spread of this financial contagion is already lower than on March 10, but it is still not zero.
According to Techcrunch, Bitcoin is up 14.8% in the last 24 hours and its price is over $24,200. During this period, Ethereum went up 9.25% to $1,680.
Many other cryptocurrencies also went up in price, including the stablecoin USDC, which fell to $0.88 after the bankruptcy of Silicon Valley Bank—which held $3.3 billion in cryptocurrency collateral. Now, amid the promises of the US authorities, the USDC is almost back to the $1 price.
When Silvergate Capital, one of the largest banks providing services to companies in the cryptosphere, announced that it was shutting down and liquidating its banking division, it predictably caused problems in the cryptocurrency market, as well as in many other large sectors.
Shortly thereafter, Silicon Valley Bank went bankrupt on March 10, and regulators closed Signature Bank on Sunday.
However, all these problems do not seem to have had a long-term negative impact on the cryptocurrency market.
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