Bitcoin’s BTC Price Store With Value Narrative Is On Full Display; Crypto prices remain green

Twenty-four hours ago, crypto was in deep trouble. The industry’s fiat pipelines were disconnected one by one. Circle’s USDC had been turned off due to its exposure to Silicon Valley Bank, and still hadn’t recovered.

Stablecoins are meant to be crypto’s safe haven. They came into the spotlight during the March 2020 Covid crypto crash, and the subsequent bull market, making them a central part of the ecosystem.

“We are watching closely whether this moment creates an opening for other currencies, particularly the euro, to emerge as a hub in the digital asset ecosystem,” said David Bachelier, managing director of Asia-Pacific at Flowdesk in a note to CoinDesk. “Such an outcome would be positive, as it would also strengthen the euro’s role in crypto in terms of trading volume. This would put crypto-fiat trading volumes more in line with the proportions of the euro’s trading volume to that of the dollar.”

Layer-1s like Solana, Polkadot and Avalanche are all pretty flat.

On-chain data suggests this rally is driven by a flight from USDC to bitcoin. Data from Nansen shows that access to USDC on exchanges has increased in recent days. Total supply on exchanges is up 8% compared to a week ago. Notably, the largest deposit of USDC in the last 24 hours was 18.3 million, a 41% increase from the previous record of 13 million.

The same cannot be said for USDT. There has been a 5.7% decline in USDT on exchanges from the past week, resulting in a negative net flow of 96.6 million.

“Bitcoin is surging as financial stability risks sent Treasury yields crashing. In a battle to avoid another massive bank run, federal regulators stepped in as some Americans became skeptical of traditional banking,” said Edward Moya, senior market analyst at Oanda. to CoinDesk via email “Bitcoin volatility should remain elevated, and it will be interesting to see how much momentum will remain with today’s wave.”

Moya also pointed to gold as a continued safe haven in times of government bond uncertainty.

“Gold is breaking out as volatility picks up, Treasuries rise, and there appears to be too much headline risk,” he wrote. “The 2-year Treasury yield is down 49 basis points to 4.095%, meaning we’re down almost a full point since last week. The entire financial curve is now below the Fed’s target, and that normally means a recession is coming.”

Will small banks fill the crypto gap?

The crypto ecosystem was built on the belief that no one entity, i.e. a bank, should be responsible for a person’s finances, but until that becomes a reality, traditional banking will probably have to act as a bridge between centralized finance and decentralized finance.

Therefore, the closure of Silvergate Bank, Silicon Valley Bank (SVB) and Signature Bank will certainly cause headaches for the industry in the short term as many crypto companies search for new banking partners, unsure if larger entities even want to touch crypto. companies anytime soon.

“For now, it is not clear which new financial institutions will partner with these crypto companies in the wake of Silvergate, SVB and now Signature,” said Ilya Volkov, CEO and co-founder of YouHodler, a Swiss-based international fintech platform that offers a range of Web3 crypto and fiat services.

“The industry is currently running out of options and that needs to be resolved soon to prevent further problems,” Volkov added, noting that it will cause some fear-based reactions from investors.

In the long run, however, this contagion should not hurt the crypto industry, as there will likely be other smaller banks likely to bridge the gap. “Crypto liquidity is likely to take a hit in the short term, but this is an opportunity for new innovative challenger banks to step up and take the place of SVB, Silvergate and Signature,” said Andrei Grachev, managing partner of the digital asset market maker. DWF Labs.

Read the full version of this analysis here.

Bitcoin (BTC) has climbed above $24,000 in the past 24 hours as the Federal Deposit Insurance Corporation said Silicon Valley Bank depositors would have full access to their money starting Monday morning, after confirming a successful transfer of deposits to a new bridge bank . This came as crypto exchange Binance said it would convert $1 billion worth of Binance USD (BUSD) into bitcoin (BTC), ether (ETH), BNB coin (BNB) and other tokens to support the market.