Adedapo Adesanya
By Adedapo Adesanya
Bitcoin (BTC) and Ethereum (ETH) were up on Monday morning after the United States government stepped in to avert one of the worst banking crises in over a decade.
On its part, BTC was up 7.3 per cent to $22,025.84, while ETH was up 7.0 per cent to $1,575.27.
Some other cryptos were also up, including Litecoin (LTC), which has added 9.3 per cent to $75.35, Cardano (ADA) up by 8.1 per cent to $0.03315, Solana (SOL) added 5.8 per cent to $19.15, and Dogecoin (DOGE), as at press time, was up by 3.8 per cent to $0.0689.
Last Wednesday, the crypto market was faced with a lot of setbacks, starting with Silvergate Capital, a major lender to the crypto industry, saying it was winding down operations and liquidating its bank.
The market was reeling from the news when the Silicon Valley Bank (SVB) collapsed on Friday in what was the biggest banking failure since the 2008 financial crisis.
The collapse of both banks, Silvergate and SVB, can be tied to the aggressive rate hikes by the US central bank, the Federal Reserve, in its bit to keep inflation around 2 per cent in the world’s largest economy.
Since both lenders put their money into US Treasuries, they have lost value as the US Federal Reserve has raised interest rates. These banks have been forced to sell these bonds at a loss to shore up their capital position.
The market was then faced with the closure of a third bank, Signature Ban, a major lender in the crypto industry. This sent jitters to the broader banking sector.
To help ease this, US regulators made up of The US Treasury, Federal Reserve, and Federal Deposit Insurance Corporation said Sunday that depositors of SVB will have access to all of their money starting Monday (today).
Along with that move, the Federal Reserve also said it is creating a new Bank Term Funding Program aimed at safeguarding institutions affected by the market instability of the SVB failure.
A joint statement from the various regulators involved said there would be no bailouts and no taxpayer costs associated with any of the new plans.
“No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer,” the regulators said, adding that depositors at Signature Bank will be made whole.
In a related development, HSBC said it had agreed to acquire the UK arm of SVB for £1. The UK Treasury also said Monday that “no taxpayer money is involved, and customer deposits have been protected.”
