Bitcoin Gathers as Silicon Valley Bank Parent Files for Bankruptcy
Bitcoin and other cryptocurrencies rallied on Friday, just as tech-friendly bank Silicon Valley Bank’s former parent filed for Chapter 11 bankruptcy and shares fell on fears of a banking crisis.
The largest digital asset by market capitalization pushed past $27,000 Friday morning Eastern Time. At the time of writing, it had fallen to $26,555 – a 6.2% jump in 24 hours. It is up over 30% in the last week.
Meanwhile, Ethereumthe second largest cryptocurrency by market cap, was trading at $1,727, up 4% in the last day – and more than 20% in seven days.
But the stock market doesn’t move in step—a shift from the correlation that investors and traders have grown accustomed to in recent years. US stocks and bank shares fell today as scared investors pulled back from their positions on fears of a potential banking crisis.
Regulators close Silicon Valley Bank (SVB) last week, sending shockwaves through the financial system.
A number of crypto companies admitted exposure to the firm, which had positioned itself as the technology startup world’s favorite bank. SVB’s former parent company today archived for bankruptcy in a move to seek buyers for its assets.
It came after crypto-friendly bank Silvergates on March 8 turn off. Then, after SVB’s failure, regulators in New York decommissioned Signature, another bank that turned to the crypto world – is causing problems for companies with digital assets that relied on such firms to access the traditional financial system.
The banking industry has since been on shaky ground: Swiss Credit Suisse’s stock plunged earlier this week after the Saudi National Bank – its biggest lender – said it would not offer more financial help.
And today, regional US bank First Republic’s shares took a hit as it continues to face a crisis of confidence from investors and customers.
Why is Bitcoin and the rest of the digital asset market doing so well?
It may have something to do with the Federal Deposit Insurance Corporation rejects reports that potential buyers of Signature Bank must stop doing business with crypto – which instills investor confidence in digital assets.
And investors may have a renewed appetite for risk: The Federal Reserve’s rate hike cycle may be coming to an end due to the current shaky state of the banking world.
Shipyard Software CEO Mark Laurie told Decrypt that the Federal Reserve’s Bank Term Funding Program – which promises cash to struggling banks – “effectively restarts quantitative easing, which is what inflated the crypto and growth asset bubble in the first place.”
