• US Federal Reserve provides backstop for Silicon Valley Bank depositors, restoring market confidence
• Cryptocurrency market rebounds with Bitcoin and major altcoins Cardano, Polygon, and Litecoin gaining 9-15 percent
• Top three US banking regulators step in to protect depositors from potential losses associated with resolution of Silicon Valley Bank
FED’s Intervention Boosts Crypto Prices
The US Federal Reserve took action to protect the depositors at the collapsed Silicon Valley Bank (SVB) by providing a backstop and this helped restore market confidence. As a result, Bitcoin (BTC) and all of the top ten altcoins registered gains between 9-15 percent in early trading hours on Monday. The overall crypto market has added $70 billion to investors‘ wealth, of which Bitcoin alone has contributed nearly $40 billion.
US Regulators Step In
The top three US banking regulators – the U.S. Treasury, Federal Reserve, and Federal Deposit Insurance Corporation – stepped in announcing that the depositors at the Silicon Valley Bank will get access to their money on Monday. The move was intended to create a backstop for SVB and protect depositors associated with them from any losses associated with the resolution of Silicon Valley Bank.
Crypto Exchange Vice President Speaks Out
Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC: Given the Fed announcement over the weekend of a backstop for banks and specifically Silicon Valley Bank, markets have turned euphoric knowing that depositors‘ money is safe and a major potential bank run has been averted. Some of the major crypt firms like USDC stablecoin issuer Circle, Paxos Standard, and crypto exchange Gemini have also seen an increase in deposits after this announcement from regulators.
Silvergate And SVB Sell Bonds At A Loss
Silvergate and silicon Valley Bank (SVB) had no option but to sell their bonds at a loss in order to shore up capital as Treasuries lost their value due to interest rate hikes by banks. This situation caused panic among investors but was quickly stabilized when US government intervened last Sunday by closing Signature Bank to prevent further contagion effects spread across financial institutions.
Final Thoughts
This situation was quickly stabilized as soon as news broke out that US government intervened by closing Signature Bank while protecting all deposits associated with SVB through its backstop offer announced on March 12th 2021.. Despite facing a week long intense selling pressure Bitcoin price is once again above $22500 level leading other altcoins such as Cardano, Polygon & Litecoin following suit showing 7-10% gains respectively
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