Bitcoin Price Soars Amid SVB Collapse
The price of Bitcoin (BTC) has surged as the Biden Administration rushes to prevent the collapse of Silicon Valley Bank (SVB) from causing a mass exodus at regional banks across the United States.
The Treasury Department is reportedly holding emergency meetings to determine whether it should ensure all depositors at SVB are made whole after the bank’s sudden collapse.
The collapse of SVB
SVB’s collapse has led to concerns that it could trigger panic in the US financial system. According to the Washington Post the FDIC is reportedly seeking a buyer for the California bank over the weekend, ahead of the markets opening on March 13. However, a final decision has yet to be made, and a deal may not be reached.
The outlet cites people who are speaking on internal deliberations at the Treasury Department, Federal Reserve, and FDIC.
An abrupt, widespread realization that American bank accounts, including corporate accounts, are only insured up to $250,000 by the FDIC has coincided with a sharp reversal in the price of BTC. Bitcoin has soared from a 24-hour low of about $20,400 to a high of $22,700 – an 11% increase.
Bitcoin and the modern banking system
The pseudonymous creator of BTC, Satoshi Nakamoto, explicitly created the original cryptocurrency as a response and alternative to the modern banking system. The asset was born out of the 2008 financial crisis, which was the last time American banks and financial institutions crumbled at the expense of everyday citizens.
In creating the world’s first cryptocurrency, Nakamoto aimed to create a monetary system with an inherently scarce supply backed by a transparent and verifiable means of processing and validating transactions without the need for a bank or middleman. Bitcoin’s inventor described his, her or their creation as an antidote to the modern financial system.
READ MORE: Crypto Advocacy Group Coin Center Debunks Claims that Ethereum (ETH) is a Security
The crypto industry and banking system
The crypto industry is battling its own problems with the banking system after the collapse of the crypto-friendly bank Silvergate. That bank cited regulatory pressures and “recent industry developments” as the reason it closed its doors.
Silvergate’s shutdown sparked last week’s downturn in the crypto markets, and the fall of Silicon Valley Bank also directly affected the industry. Circle, the company behind the stablecoin USDC, revealed it has $3.3 billion of its $43 billion in reserves at Silicon Valley Bank.
The disclosure led to a crash in the price of USDC, which dropped to as low as $0.84 and is now trading at $0.99 at the time of publishing. The firm will use its resources and internal capital to cover the shortfalls.
The CEO of the world’s largest crypto exchange by volume, Changpeng Zhao, warns that any stablecoin tied to the banking system could face similar problems in the future.
Banks are a risk to fiat-backed stable coins.
— CZ 🔶 BNB (@cz_binance) March 12, 2023
Andrey Kunev
Reporter at CoinsPress
Andrey Kunev is a knowledgeable cryptocurrency content creator passionate about the crypto market. With extensive experience in market analysis and investment reporting, Andrey is a valuable asset to the CoinsPress team. As a frequent contributor, he offers insightful and comprehensive coverage of market trends, price fluctuations, and new advancements in cryptocurrency. Whether you're a seasoned investor or just getting started, Andrey's clear and concise writing offers a comprehensive look at the current state of the crypto market and its prospects. Stay up-to-date with CoinsPress's expert analysis and commentary on all things cryptocurrency.
