Bitcoin (BTC), crypto prices rise as SVB depositors protected

Cryptocurrencies rallied on Monday as the US government moved to protect depositors in the collapsed Silicon Valley Bank and HSBC bought the lender’s UK arm.

Bitcoin was up nearly 10% at 3 a.m. ET at $22,560.20, its highest level in 10 days, according to CoinDesk data. Ether was also around 10% higher at $1,614.89.

The total cryptocurrency market gained more than $70 billion in the 24 hours to 2 a.m. ET, and jumped back above $1 trillion on Monday.

It has been a rollercoaster ride for the crypto markets following the collapse last week of Silvergate Capital, a major lender to the crypto industry. Silvergate said Wednesday it is winding down operations and liquidating the bank.

Then came the collapse of Silicon Valley Bank on Friday in what was the biggest bank failure since the 2008 financial crisis.

Both Silvergate and SVB put their money in US government bonds, which have lost value as the US central bank has raised interest rates. These banks have been forced to sell these bonds at a loss to strengthen their capital position.

That was followed on Sunday by the closure of Signature Bank, a major lender in the crypto industry, by US regulators to stop any contagion to the wider banking sector.

These measures by regulators to create a backstop for SVB and protect depositors in these institutions have increased investor confidence.

The US Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation said on Sunday that depositors to SVB will have access to all their money starting Monday.

“No losses related to the dissolution of Silicon Valley Bank will be borne by taxpayers,” the regulators said.

Depositors in Signature Bank will be “made whole,” they added.

“Given the Fed’s announcement over the weekend of a backstop for the banks and specifically Silicon Valley Bank, markets have become euphoric knowing that depositors’ money is safe and a major potential bank run has been averted,” Vijay Ayyar, vice president of corporate development and international at the crypto exchange Luno, told CNBC via email.

In addition, HSBC said it had agreed to buy the UK arm of SVB for £1 ($1.21). The UK Treasury said on Monday that “no taxpayers’ money is involved and customer deposits have been protected.”