Why is the crypto market up today? BTC Rises Above $27k – Cryptopolitan

The rise of BTC in the face of a growing US banking crisis is similar to how it reacted during the banking collapses of Cyprus and Greece. During the Cyprus financial crisis in 2013, the price of BTC increased by up to 5,000% due to Cypriot banks’ exposure to overburdened regional real estate companies.

When Greece faced a similar crisis in 2015 and imposed capital controls on its citizens to prevent a bank run, the price of BTC increased by 150%. So the current market decline comes as no surprise to seasoned investors. According to Federal Reserve Chairman Jerome Powell, “people’s expectations about inflation have a real effect on inflation.”

The US banking system will lose $100 billion by 2023

According to data compiled by CompaniesMarketCap.com, the six largest US banks – JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Morgan Stanley and Goldman Sachs – have lost nearly $100 billion in market value since the beginning of the year.

Bank values ​​in the USA have fallen as a result of the ongoing regional banking collapse in the country. This includes the closure of Silvergate, a crypto-friendly bank, last week, followed by regulators’ subsequent takeovers of Signature Bank and Silicon Valley Bank.

The crisis was compounded by the near-collapse of First Republic Bank, which was saved at the last minute by a combined $30 billion infusion from Wells Fargo, JPMorgan Chase, Bank of America and Citigroup, among others.

What has caused the crypto market to rise?

1. Bank error

Given BTC’s history, the proximity to bank failure is obvious: At least three banks have failed, and more banks, both US and foreign, are failing. But because it is not due to Bitcoin, this is positive for the price of bitcoin.

Actually, it is unclear who is to blame for the three bank failures, since it is unknown whether these banks are insolvent. But, certainly, SVB failed as a result of an old-fashioned bank run compounded by apparent balance sheet weaknesses resulting from poor duration risk management.

And, yes, Silvergate ran into difficulties and required an FHLB loan, but the eventual shutdown was reportedly voluntary. And then there’s Signature Bank, where even regulators can’t decide whether the bank was shut down because of crypto or a “crisis of confidence” in management.

These banks are not in trouble as a result of betting on bitcoin, cryptocurrency or companies in these industries. Instead, the fractional reserve banking system appears to be under stress from rising interest rates, and the cracks are showing. When banks fail, the narrative goes, opt out and buy bitcoin. That narrative is compelling enough to drive up the price.

2. The instability of stablecoins

Following the failure of Signature Bank, the USD coin (USDC) lost its dollar peg last weekend. The USDC regained the link during the week, but the loss of the link alarmed many people. To the USDC’s credit, it’s worth noting how quickly it bounced back to $1. However, the depreciation showed that the USDC is not immune to counterparty risk, as some may have mistakenly assumed.

A related stablecoin story took place in the early hours of March 13 when Binance, the world’s largest crypto exchange by trading volume, converted $1 billion of stablecoin Binance USD (BUSD) in US dollars into bitcoin, ether and other cryptocurrencies. The conversion was the consequence of Binance competitor Coinbase officially shutting down BUSD trading on its platform due to “liquidity concerns”.