Crypto prices rise as regulators crack down on Silicon Valley Bank collapse
Top line
The value of tokens such as bitcoin and ether rose on Monday after hitting week-long lows on Friday, part of a broader rally in cryptocurrency prices as markets react to the growing fallout from the collapse of Silicon Valley Bank and fears grow over the prospect of a broader financial crisis.
Keywords
Bitcoin, the world’s largest cryptocurrency by market capitalization, was trading at nearly $22,300 on Monday morning, up about 9% from the previous day.
Ether, the world’s second-largest cryptocurrency by market capitalization, was trading at nearly $1,600 on Monday, up nearly 7% from Sunday.
Prices for both tokens fell to near two-month lows on Friday following the collapse of crypto-friendly bank Silvergate and tech lender Silicon Valley Bank.
Other leading cryptocurrencies by market cap — including Binance’s BNB, Cardano’s ada and Solana’s sol — also jumped between 4% and 8% on Monday.
Stablecoin USD Coin (USDC) – which is meant to be pegged to the US dollar one-to-one – was trading at $0.96 on Monday morning, largely recovering losses from the weekend after it lost its dollar peg and fell as low as $0.88 .
Big number
1.05 trillion dollars. That’s how much the total cryptocurrency market is worth, according to CoinGecko. The figure, up 7% from the previous day, reflects the broader crypto market rally after regulators stepped in to guarantee SVB deposits on Sunday. The crypto market capitalization fell below $1 trillion last week as the failure of Silvergate and SVB raised concerns about the stability of financial markets.
News Peg
A series of events last week dampened enthusiasm for cryptocurrency. Silvergate, a major lender in the crypto sector, announced plans to liquidate the bank and wind down its operations on Wednesday. SVB, then the 16th largest bank in the country and a key lender in the technology area, collapsed on Friday. Another bank, Signature, followed suit on Sunday. The failures, the biggest since the 2008 financial crisis and the second and third biggest US failures overall, have rocked financial markets, including cryptocurrency. Confidence was somewhat restored on Sunday, when federal regulators moved to protect all deposits with SVB. Signature customers are also protected, Treasury Secretary Janet Yellen said.
What you should look for
Officials, who have ruled out a bailout for 2008-era investors, are confident the financial system is robust, but there remain concerns about the wider fallout from the collapse. Technology companies in particular are concerned about the loss of such a key player in the ecosystem, and foreign regulators are monitoring the situation for possible ripple effects. SVB’s British subsidiary, a major lender to technology and biotechnology start-ups in the country, was rescued by banking giant HSBC on Monday. The risk is not over for other US banks either. Shares in First Republic Bank fell about 65% in premarket trading in New York on Monday morning, a drop that follows concerns over the bank’s liquidity and has continued despite it issuing a statement assuring investors that it had $70 billion available from sources including JPMorgan Chase and the Federal Reserve.
Further reading
Broken Banks Silvergate and SVB Put Pressure on Crypto, Leaders End Week Down 10% (Forbes)
What the Failures of Signature, SVB and Silvergate Mean for the Crypto Sector (CNBC)
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