Bitcoin Hits a 9-Month High After UBS-Credit Suisse Deal

– UBS Group to acquire Credit Suisse by paying $3.25B, which is only 60% of the company value.

– Bitcoin has seen growth even after Silvergate and Signature banks fall.

Bitcoin and other cryptocurrencies have continued their growth despite turmoil across financial markets. One major reason is the recent global panic over banks which has helped investors. The failure of Silicon Valley Bank on March 10 and the rival UBS group’s emergency takeover of Credit Suisse are two examples of the trend. Despite turbulence in the crypto market, Bitcoin and other digital assets have rallied.  

What factors have led to the spike in Bitcoin prices?

According to Hal Press, the founder of crypto hedge fund North Rock DIgital has informed that the banking group is uniquely favorable for cryptocurrency. He has also pointed out how the situation validates the use case of cryptos as a global financial alternative and protection against the volatile market.

A major factor behind the rally is that the digital market has suffered from liquidity issues since the fall of the crypto exchange FTX last November. The recent collapses of Silvergate Bank and Signature Bank have also negatively impacted the overall balance. According to Coinglass, in the past 10 days, more than $1 billion in bearish bets against Bitcoin have been wiped out. 

Crypto traders have also expected the Feds to be more lenient on monetary policy due to the panic at major banks. Such bank stresses have led to losses on bond holdings. Higher rates have also affected the crypto market, as demand for such assets is dampened when the rates increase. Amongst this, Bitcoin’s rise may be the earliest expression of investors seeing an eventual ease in financial conditions to benefit from risky digital assets. 

Bitcoin’s price has rapidly grown from $20k to $28k, almost 70%, since the start of 2023. The currency has thrived even after the collapse of cryptocurrency banks like Silvergate and Signature. Bitcoin has seen significant gains, crossing its 200-week moving average(MWA) and reaching $28,500k for the first time since June 2022. 

The  Deal between Credit Suisse and UBS Group

Bitcoin, the world’s biggest cryptocurrency, surged to a 9-month high of $28,500 after Credit Suisse announced its merger deal with UBS Group, Switzerland’s largest banking firm. This seems like a rescue deal for Credit Suisse, which has been struggling with operational issues, prompting the central bank and the local financial regulator to intervene.  

The terms of the agreement state that UBS will pay nearly $3.25 billion to acquire Credit Suisse, which is 60% less than the original worth of the company. All company shareholders will receive 1 share in UBS for 22.48 shares in Credit Suisse. The Chairperson of the company’s Board of Directors commented on the merging deal, saying the deal represents the best available outcome. 

Justin Sun, the founder of Tron, has displayed his ambition to purchase the bank for $1.5 billion. He has plans to integrate and develop the web3 universe while praising Switzerland as a global crypto-friendly destination. However, there may be little appetite for a crypto-friendly bank following the recent failures. Also, the UBS Group has planned to reduce the size of the company’s investment bank. 

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Source: https://www.thecoinrepublic.com/2023/03/21/bitcoin-hits-a-9-month-high-after-ubs-credit-suisse-deal/