US officials stabilize the banking system, boosting cryptos
Bitcoin and other cryptos rallied after U.S. authorities said they plan to delay the fallout from the collapse of Silicon Valley Bank and cryptocurrency firm Circle told investors it was safe to dock.
The U.S. Treasury and Federal Reserve issued expected steps to stabilize the banking system and said SVB depositors would be able to access their deposits.
Stablecoin USD, which lost its 1:1 peg to the dollar and hit record lows on Saturday on fears of Circle, the USDC-backing firm Silicon Valley Bank, edged higher. It was $0.9918, closer to a positive result than last week’s $0.87.
Bitcoin rallied about 8.4% on Sunday’s weak data, trading at $22,567.
U.S. officials said that depositors at Signature Bank of New York, which New York state’s financial regulator shut down on Sunday, will not cost taxpayers.
A signature, like SVB, had customers concentrated in the technology sector, and rising interest rates negatively impacted the securities on its balance sheet. As of September, roughly one-fourth of Signature’s deposits were generated from the cryptocurrency industry. However, the bank announced in the winter month that it would reduce cryptocurrency-related deposits by $8 billion.
Most analysts cautioned against hoping market sentiment would improve after implementing these mechanisms.
Meanwhile, crypto exchange Bitstamp said it would continue operating as usual despite the negative results from Signature Bank.
$1 Billion Blow to Crypto
When Binance, one of the globe’s biggest crypto exchanges, declared the conversion of its funds from its Business Revitalization Program’s BUSD stablecoin to cryptocurrencies such as BTC, BNB, and ETH, the firm experienced a $1 billion loss to the crypto bear market.
The CEO of Binance announced that several funds would be invested in the chain to ensure transparency. Binance’s move indicates the exchange’s faith in the crypto market’s future. Many are hoping that this move could be the reason for the sudden increase in BTC, ETH, and BNB prices.
Binance’s decision comes amid a growing struggle for US-based cryptocurrency businesses as banking challenges pose significant problems.