The price of bitcoin rose above $24,000, a nearly 10 percent rally. That’s about 18 percent above Friday’s levels.
Ethereum rose 8.5 percent to near $1,670.
The bounce in venture capital came after U.S. regulators announced Sunday night that they would bail out all depositors of failed Silicon Valley Bank and prepare to provide additional funding to other banks.
At the same time, the crypto market rally is fueled by expectations that the Fed will perhaps be less aggressive in raising interest rates now that the authorities have intervened because of SVB and Signature Bank, writes the CNBC. In parallel with the latter, the dollar also weakens, which is also favorable for cryptocurrencies.
The slower pace of rate hikes and the lower final interest rate, as well as the likely injection of liquidity to support banks struggling to meet withdrawals (via the Bank Term Funding Program), presupposes greater market liquidity, even if this may be partially offset by higher volatility
– said economist Noelle Acheson, author of the “Crypto is Macro Now” newsletter.
The U.S. Treasury Department, the Federal Reserve and the FDIC announced in a joint statement on Sunday that Signature Bank was closed that same day to prevent the spread of the banking crisis.
Both banks were poorly diversified. High risk often comes with high returns, however, if the underlying balance sheet collapses – as the Fed drains liquidity from the system and raises interest rates – crypto startups and venture capitalists may have a long way to go to recover.
said Sylvia Jablonski, CEO and Chief Investment Officer of Defiance ETFs.
By the way, Signature Bank was a particularly crypto-friendly institution, the second largest after Silvergate. With the demise of the Silvergate-Signature duo, the crypto world is left with few gateways that allow fiat money to flow into crypto assets. They helped solve this problem by creating simple banking services and payment platforms for crypto companies; namely the Silvergate Exchange Network and the Signature Signet platform.
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