Crypto Prices Rebound As Regulators Step In Over Silicon Valley Bank Collapse

Topline

The value of tokens like bitcoin and ether rallied on Monday after hitting weeks-long lows on Friday, part of a broader rally in cryptocurrency prices as markets react to the widening fallout from the collapse of Silicon Valley Bank and fears grow over the prospect of a broader financial crisis.

Key Facts

Bitcoin, the world’s largest cryptocurrency by market capitalization, was trading at nearly $22,300 on Monday morning, up about 9% from the day before.

Ether, the world’s second-largest cryptocurrency by market capitalization, was trading at nearly $1,600 on Monday, up almost 7% from Sunday.

Prices for both tokens fell to nearly two-month lows on Friday following the collapse of crypto-friendly bank Silvergate and tech lender Silicon Valley Bank.

Other leading cryptocurrencies by market capitalization—including Binance’s BNB, Cardano’s ada and Solana’s sol—also jumped between 4% and 8% on Monday.

Stablecoin USD Coin (USDC)—which is meant to be tied to the U.S. dollar one-for-one—was trading at $0.96 on Monday morning, largely recovering losses from the weekend after it lost its dollar peg and fell as low as $0.88.

Big Number

$1.05 trillion. That’s how much the total cryptocurrency market is worth, according to CoinGecko. The figure, up 7% from day before, reflects the broader crypto market rally after regulators intervened to guarantee SVB deposits on Sunday. The crypto market cap fell below $1 trillion last week as the failure of Silvergate and SVB ignited wider concerns over the stability of financial markets.

News Peg

A number of incidents last week dampened enthusiasm for cryptocurrency. Silvergate, a major lender in the crypto sector, announced plans to liquidate its bank and wind down operations on Wednesday. SVB, at the time the 16th largest bank in the country and a key lender in the tech space, collapsed on Friday. Another bank, Signature, followed in its footsteps on Sunday. The failures, the biggest since the 2008 financial crisis and the second- and third-largest U.S. failures overall, has shaken financial markets, including cryptocurrency. Confidence was somewhat restored on Sunday, when federal regulators moved to protect all deposits at SVB. Signature customers are also protected, Treasury Secretary Janet Yellen said.

What To Watch For

Officials, who have ruled out a 2008-era investor bailout, are confident the financial system is robust but concerns remain over the wider fallout from the collapse. Tech companies, in particular, are worried over the loss of such a key player in the ecosystem and foreign regulators are monitoring the situation for possible spillover effects. SVB’s U.K. subsidiary, a major lender to tech and biotech startups in the country, was rescued by banking giant HSBC on Monday. The risk is also not over for other U.S. banks. Shares of First Republic Bank fell around 65% in premarket trading in New York on Monday morning, a fall that follows concerns over the bank’s liquidity and has continued despite it issuing a statement reassuring investors it had $70 billion available from sources including JPMorgan Chase and the Federal Reserve.

Further Reading

Broken Banks Silvergate And SVB Put Pressure On Crypto, Leaders End Week Down 10% (Forbes)

What the failures of Signature, SVB and Silvergate mean for the crypto sector (CNBC)