Bitcoin overcomes industry headwinds to reach 9-month high
Bitcoin prices rose today, setting several multi-month highs as the digital currency continued to extend recent gains.
The world’s most prominent digital currency passed $27,300 around 6:15 p.m. EDT, CoinDesk data shows.
At the time, the cryptocurrency was trading at its highest since June and had appreciated about 35% in a week, additional CoinDesk figures show.
The digital climbed to this level after hitting an earlier nine-month high near $27,000 around 8 a.m. EDT this morning.
After rising to this highest level in months, bitcoin pulled back a bit, falling below $26,200 within hours.
After suffering this decline, the digital currency resumed its upward trend, surpassing $27,300 this evening.
Bank error
The cryptocurrency experienced these gains after a tough week where several banks suffered failures.
Earlier this month, Silvergate Capital Corporation announced plans to liquidate Silvergate Bank, stating that it planned to return all deposits to account holders.
The troubled lending institution suffered from a wave of account holders withdrawing their money after the announced bankruptcy of FTX, according to Reuters.
Shortly after that announcement, markets were dealt another blow when the California Department of Financial Protection and Innovation shut down Silicon Valley Bank, putting the Federal Deposit Insurance Corporation in charge of ensuring that individuals and entities holding insured deposits there would get their money back .
Until recently, SVB was one of the largest banks in the nation, according to USA Today.
On March 12, investors received the latest round of bank-related news, when the New York Department of Financial Services took control of Signature Bank, which had over $100 billion in assets.
The FDIC became receiver of the financial institution, which had 40 branches in states across the United States
The next day, the FDIC announced that account holders could access all deposits held by SVB, regardless of whether they were insured or not.
As a result, the US federal government chose to support $175 billion worth of deposits, a move that has not been without controversy, according to NPR.
Switzerland-based Credit Suisse, which has struggled with various problems, recently accepted an offer to borrow more than $50 billion from the European nation’s central bank, funds it will use to undergo a reorganization.
The Swiss National Bank announced that it will provide this support because Credit Suisse “meets the higher capital and liquidity requirements applicable to systemically important banks.”
First Republic Bank, which had assets worth more than $200 billion at the end of 2022, also made headlines this week when a consortium of major financial institutions announced plans to inject $30 billion into the troubled institution, which caters to wealthy individuals.
FOMC concerns
Market participants are also worried about how high Federal Reserve officials will raise benchmark interest rates, a development that has broader implications for lending costs and thus the economy.
While the aforementioned authorities have promised to bring red-hot inflation under control, rising borrowing costs could easily slow growth, potentially pushing the US economy into recession.
Furthermore, higher benchmark rates can easily create headwinds for risk assets such as digital currencies and shares, which do not pay investors a return.
Investors around the world have been watching the Fed closely to see how high it pushes the target range for the benchmark federal funds rate.
Later this month, market watchers will be watching for the latest rate decision from the Federal Open Market Committee.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS EOS and sol.
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