In this article we will analyze how the crypto world has reacted to the Silicon Valley Bank bankruptcy, keeping an eye on recent updates on the case.
The US government took action to prevent the Silicon Valley Bank bankruptcy (SVB) from having a systemic impact similar to that of Lehman Brothers in 2008. However, this action resulted in the closure of a second bank, Signature Bank.
The Treasury, the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve announced that SVB depositors will be able to access their funds starting Monday, while the central bank offered a new liquidity window to help banks manage the customer requests in case of escape.
Meanwhile, the closure of Signature Bank, which services many cryptocurrency firms, was the second significant bank failure in three days and the third-largest in history, after Washington Mutual in 2008 and SVB.
The crypto world is rebounding in the face of the Silicon Valley Bank bankruptcy
Venture capital firms and tech start-ups were hit the hardest by the SVB’s failure, but a number of cryptocurrency firms also said they had exposure to the bank.
The likes of Blockfly, Circle, Avalanche, and many more, have said they have exposure to Silicon Valley Bank. A situation has led several of these companies to temporarily suspend customer withdrawals.
However, it seems to be the Circle stablecoin, USDC, which suffers the most, which despite the reassurances of the CEO, Binance and Coinbase have suspended its exchange.
But how did the other cryptocurrencies react to the Silicon Valley Bank bankruptcy?
During these past days, Bitcoin has recovered more than 20% of its value from the lows of these days, and so more or less all the other tokens.
But this is perhaps the essence of Bitcoin, the contrast with the stock market. Bitcoin was born precisely, to give an alternative to the classic financial market, and today with the crisis of this market, the most famous crypto in the world seems to come out as the winner.
Similarly, Ethereum is also showing positive signs with an increase of around 7% since last Friday, when it reached its lowest point for the month.
Both major cryptocurrencies, Ethereum and Bitcoin, hit their lowest point for the month last Friday. Without a doubt, the news of the first impact banking crises created a negative effect for investors, who were then reassured by the various crypto companies.
In general, we can say that the cryptocurrency market is in full recovery these days. Other cryptocurrencies such as Cardano, Ripple, Polygon, and Dogecoin are also on the rise. We cannot predict whether the effects of the bank collapse will reverberate later, but for now, the crypto world is doing its best.
Som consider the closure of the Signature Bank a real political conspiracy
“ There are no objective reasons for closing Signature Bank. I believe that part of what happened is due to the regulator’s desire to send a very strong message against cryptocurrencies. We were used as a scapegoat because there was no default, based on fundamentals.”
This statement was made by Barney Frank, a former lawmaker who played a major role in passing legislation to safeguard the banking sector in the aftermath of the 2008 financial crisis.
He currently serves on the board of directors of Signature Bank, which was recently closed due to financial problems.
The message is alarming and could reinforce the concerns of those who view the closure of Signature Bank as a political move aimed at limiting the few banks in the US that provide banking services to the cryptocurrency industry, including intermediaries such as exchanges and traders, stablecoins, and other related services.
Rumor has it that some regulators are also puzzled by the sudden closure of the bank, as there appears to be no reason behind the decision.
To be precise, there was a problem with a deposit on Friday, caused by a contagion effect from Silicon Valley Bank.
Similar problems have been encountered by other banks of similar size, but they have received the full support of the Federal Reserve and other federal networks.
The situation raises questions and we can only hope to discover the truth behind it.
It is clear that something is not right and it appears that the US government is trying to exert control over various industries and potentially suppress the cryptocurrency industry on a whim.
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