Crypto prices rally as regulators step in over Silicon Valley bank collapse

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The value of tokens like bitcoin and ether rallied Monday after hitting week-long lows on Friday, part of a broader rally in cryptocurrency prices as markets react to the widening fallout from the Silicon Valley bank collapse and fears over the prospect of a growing financial crisis.

Important facts

Bitcoin, the world’s largest cryptocurrency by market cap, was trading at nearly $22,300 as of Monday morning, up about 9% from the previous day.

Ether, the world’s second largest cryptocurrency by market cap, 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 Solana — were also up between 4% and 8% on Monday.

Stablecoin USD Coin (USDC) — which is said to be one-for-one pegged to the US dollar — traded at $0.96 on Monday morning, largely recouping losses from the weekend after shedding its dollar peg and falling down to $0.88.

Big number

$1.05 trillion. According to CoinGecko, this is how much the entire cryptocurrency market is worth. The figure, up 7% from the previous day, reflects the broader rally in the crypto market after regulators stepped in to guarantee SVB deposits on Sunday. The crypto market cap fell below $1 trillion last week as the failure of Silvergate and SVB sparked broader concerns about financial market stability.

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A series of incidents over the past week have dampened enthusiasm for cryptocurrencies. Silvergate, a major lender in the crypto sector, announced plans on Wednesday to liquidate its bank and cease operations. SVB, then the country’s 16th largest bank and a major technology lender, collapsed on Friday. Another bank, Signature, followed in their footsteps on Sunday. The defaults, the largest since the 2008 financial crisis and the second and third largest US defaults overall, have rocked financial markets, including cryptocurrency. Confidence was somewhat restored on Sunday when federal regulators decided to protect all deposits with the SVB. Signature customers are also protected, Treasury Secretary Janet Yellen said.

What to look out for

Officials who have ruled out an investor bailout in 2008 are confident the financial system is resilient, but concerns remain about the wider fallout from the collapse. Tech 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 spillover effects. The UK subsidiary of SVB, a major lender to tech and biotech startups in the country, was bailed out 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 followed concerns about the bank’s liquidity and persisted despite issuing a statement assuring investors that her 70th Billions of dollars continued to be available from sources such as JPMorgan Chase and the Federal Reserve.

Further reading

Busted banks Silvergate and SVB put pressure on crypto, leaders end week down 10% (Forbes)

What the Signature, SVB and Silvergate outages mean for the crypto sector (CNBC)

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