Cryptocurrency market defies US bank collapse. Bitcoin rose to $24,195

The bankruptcy of the two American banks, Silicon Valley Bank (SVB) and Sinature Bank, seems to have a positive effect on cryptocurrencies. Monday saw a 15% increase in Bitcoin reaching $24,195. The rise in cryptocurrencies comes amid a broader return to risk assets amid the announcement by regulators that they will support all SVB depositors.

Cryptocurrencies appreciated earlier in the week on Monday, in contrast to stocks, amid a broader rebound in risk assets. Their evolution was also not influenced by the announcement made by the US regulatory authorities that announced the closure of Signature Bank, the last major cryptocurrency bank in the US, according to CNBC News.

On the first day of the week, Bitcoin rose more than 14% to $24,195, according to Coin Metrics, and is now about 18% above Friday’s trading level. The Ether cryptocurrency rose 9% to $1,680.19.

The jump in risk assets came after US officials announced they would cover all bank deposits of depositors at the failed Silicon Valley Bank. Also, the authorities gave assurances that they will make liquidity available to the banks, in the form of a loan, in order to avoid the expansion of tensions on the financial market.

“A slower pace of hikes and a lower terminal rate, plus the likely injection of liquidity to support banks struggling to cope with withdrawals (through the Bank Term Funding Program) implies greater market liquidity, even if this it could be partially offset by higher volatility. “Bitcoin is one of the most sensitive assets to market liquidity because its ‘risk’ profile is unencumbered by earnings or rating concerns,” said Noelle Acheson, economist and editor of the Crypto is Macro Now newsletter.

Analysts’ estimates of the evolution of cryptocurrencies

The Treasury, Federal Reserve and FDIC disclosed in a joint statement that Signature Bank was closed in an attempt to prevent the spread of the banking crisis.

“Both banks had little diversification. With high risk often comes high reward, but if the balance sheet behind the system collapses — while you have a Fed draining liquidity from the system and raising rates — crypto startups and venture capitalists could have a long way to go recovery,” said Sylvia Jablonski, CEO and chief investment officer of Defiance ETFs, referring to Signature and Silicon Valley Bank.

He said the news that the Fed had created a backstop helped support stocks and cryptocurrencies. Crypto prices rose, despite the fact that it increased fears among crypto investors and entrepreneurs that regulators are crushing the industry by pressuring banks to cut off their business.

Signature Bank was a crypto-friendly institution and the next largest after Silvergate, which announced its impending liquidation last week. Wall Street analysts maintained buy ratings on Signature Bank even as the bad news surrounding Silvergate and SVB unfolded. The end of the Silvergate-Signature duo leaves cryptocurrencies with few “on-ramps” to allow fiat money to flow into crypto assets.