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13 Mar, 2023 14:48

Cryptocurrencies rally amid US banking crisis

Bitcoin soared after the government pledged to protect the depositors of failed tech lenders
Cryptocurrencies rally amid US banking crisis

Major cryptocurrencies rebounded on Monday, with the overall crypto market cap reclaiming the $1 trillion mark, following the news that the US authorities will attempt to rein in an unfolding banking crisis. 

The largest digital asset, Bitcoin, has jumped more than 18% in the past 24 hours to its highest level in over a week. The crypto was trading at $24,385 per token as of 15:30 GMT.

Other major crypto coins, including Cardano, Solana, Litecoin, Avalanche, and Filecoin, were all up by more than 10%.

The upward trend followed a joint statement from the Federal Reserve, US Treasury, and the Federal Deposit Insurance Corporation (FDIC) that all depositors of now-shuttered tech banks will be able to recover their funds.

Concerns over the health of the US financial system have grown since the failure of one of the largest tech lenders last week. Silicon Valley Bank (SVB), which had over $200 billion in assets only a few months ago, imploded on Friday after what analysts called “a classic case of bank run.” 

Alarmed over the state of the bank, depositors rushed to withdraw funds, which saw SVB’s shares crash and forced the FDIC to shut the lender down. SVB became the largest US financial institution to collapse since the crisis of 2008.

SVB’s decline followed an announcement last Wednesday from California-based, crypto-focused bank Silvergate about its impending liquidation. On Sunday, New York-based Signature Bank was shut down by regulators, becoming the third failure in the US banking industry in less than a week.

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