BTC, ETH and other crypto prices rise in line with the bank’s tank
A turbulent few days for banks, including the failures of Silicon Valley Bank (SVB), Silvergate Capital and Signature Bank, prompted US President Joe Biden to reassure the world that “the banking system is safe” even as a number of bank stocks fell on M0nday.
Meanwhile, in cryptoland, popular stablecoin USDC finally regained its peg to the US dollar early Monday following a surprise announcement late Sunday by the Federal Deposit Insurance Corporation (FDIC) that it would ensure all SVB depositors will have access to their funds.
This was good news for USDC issued by Boston-based Circle, which backed the digital currency with over $40 billion, almost ten percent of which is held at SVB. Last week it became clear that the bank, which counts a number of leading VCs and tech companies among its depositors, was in trouble, and before the week was out the Silicon Valley institution had failed.
With a significant fraction of its assets suddenly in limbo, the USDC lost its peg to the dollar and fell below 90 cents for a period. The currency recovered slowly over the weekend and then pegged back on Monday after the FDIC’s announcement and Biden’s address.
The response to the turmoil from international stock and crypto markets has been curious to watch.
Indications that anxiety remained the dominant sentiment for investors first emerged when bank shares fell as European markets opened on Monday. The slide continued as the New York Stock Exchange opened and regional bank stocks fell.
First Republic Bank saw its shares fall 70 percent before recovering slightly. Major banks like Wells Fargo and Bank of America are weathering the storm, losing only a few percentage points.
At the same time, crypto prices are seeing a big boost, with Bitcoin passing $24,000, up nearly 20 percent in the past 24 hours. Bitcoin-related token Stacks are up over 40 percent in the same period.
The price increase can be explained by an exodus of investment from the banking sector, but seems more likely the result of die-hard stablecoin holders swapping the seemingly less-than-stable tokens for blue chip crypto-assets.
Follow me on Twitter or LinkedIn. check out my website.
