Bitcoin rises over 18% in 24 hours in the wake of the SVB crisis

Image credit: Yuichiro Chino/Getty Images

The value of major cryptocurrencies rose on Monday in the wake of US government plans to protect depositors from Silicon Valley Bank and Signature Bank.

The Federal Reserve issued a pair of statements Sunday with one clear message: Silicon Valley Bank’s depositors, both insured and uninsured, will receive help in a way that will “fully protect” their deposits.

The risk of bank contagion was lower at the start of the week than last Friday, but not zero.

Following a rally in the prices of bitcoin and other crypto assets, the total crypto market passed $1 trillion in value on Monday, up about 14% day-to-day.

Over the past 24 hours, bitcoin rose 18.4% to over $24,000, while ether gained 15% to around $1,700, CoinMarketCap data showed. The two cryptocurrencies, which are the largest by market value, are traded in parallel with each other.

Image credit: CoinMarketCap (opens in new window)

USDC, the second-largest stablecoin, has also rallied around 4% in the past 24 hours following news that deposits would be protected, CoinMarketCap data showed.

The purported stablecoin was decoupled from its $1 peg for three days, plunging as low as 88 cents, after uncertainty swirled around its $40 billion USDC empire and the company shared that $3.3 billion, or about 8.2%, of its total reserves were held in SVB.

Circle announced that the reserve risk was “removed” since the funds became available on Monday morning.

“Trust, security and 1:1 redeemability of all USDC in circulation is of utmost importance to Circle, even in the face of banking contagion affecting the crypto markets,” Circle co-founder and CEO Jeremy Allaire said in a statement. “We are encouraged to see the US government and financial regulators taking decisive steps to reduce risks that extend from the banking system.”

USDC’s market capitalization is around $40.5 billion, with $10.9 billion in daily traded volume, down 1% in the past 24 hours, according to CoinMarketCap data. At press time, USDC was millicents away from its $1 peg at $0.993, up 3.9% in the past 24 hours.

The crypto market, along with other major industries, had a volatile week after Silvergate Capital, one of the largest banks providing services to crypto companies, shared that it was winding down operations and winding down its banking division.

Shortly after, Silicon Valley Bank collapsed on Friday, and Signature Bank, a major crypto lender, was shut down by regulators on Sunday.

However, this market turmoil has apparently supported the crypto market, as traders reacted positively to the news and the overall market capitalization rose on Monday.