The cryptocurrency market appears to be on the brink of recovery following an unprecedented Federal Reserve rescue effort. The joint statement from the Fed, U.S. Treasury, and FDIC that all depositors of now-shuttered Silicon Valley Bank and Signature Bank will be able to get their funds out on Monday has been a much needed Hail Mary for the battered crypto market. As of late Monday night, Bitcoin (BTC) was up to $22,300 and Ethereum (ETH) was at $1,596 – an astonishing 8% jump in the past 24 hours, according to CoinMarketCap price data. This bout of welcome news pushed the market cap of all cryptocurrencies back above the $1 trillion mark, buoyed by the top-30 coins – Cardano (ADA), Polygon (MATIC), Solana (SOL), Litecoin (LTC), Avalanche (AVAX), and Filecoin (FIL) – being up by more than 10%.
The good news also sparked a change of pace among traditional financial markets, with the U.S. dollar dipping in early Monday trading. The stir was caused by US Dollar Coin (USDC) which, as the market’s No. 2 stablecoin, was witnessing a dollar peg rebound to a price of 99.3 cents on multiple price indices. This value had plummeted to a new all-time low of 87 cents on Friday night, after issuer Circle disclosed that it still had $3.3 billion of the funds backing USDC sitting in closed Silicon Valley Bank.
The subsequent doubt cast upon USDC and other stablecoins gave reasoning to the Sunday slump in the cryptocurrency market. Yet, the shift that kick-started this disaster began only a week ago with the signals of distress from crypto-friendly Silvergate Bank, leading to the shutting down of its Silvergate Exchange Network. This was shortly followed by the dramatic halt of trading of Silicon Valley Bank, and then reverberated fear throughout other stocks as fears grew of other regional banks being at risk.
To add yet more chaos to the situation, New York State financial regulators abruptly shut down Signature Bank on Friday – a move that sent shockwaves throughout the crypto world. But, true to style and form, the cryptocurrency market’s sensational comeback has now been met with enthusiasm, thanks in no small part to the commitment from the Federal Reserve, U.S. Treasury, and FDIC to help protect depositors.
The positivity of the news was further evoked by the behavior of S&P and Nasdaq futures who, in pre-market trading, recorded significant rises. Meanwhile, not all of the commentary voiced anticipation of the situation. Talks of the potential fraud and lack of transparency, the damaging environmental impact of cryptocurrency mining, and the concept of a digital US dollar all remain, as do the words of warning from Republican House Majority Whip Tom Emmer pertaining to the power of unelected bureaucrats.
In spite of this mess, the cryptocurrency market has made an unexpected and remarkable comeback, with Bitcoin (BTC) and Ethereum (ETH) leading the charge to tip the scales back above the $1 trillion mark in the wake of an extraordinary Federal Reserve rescue mission. The coming days will be revealing in regards to the long-term effect that this event will have on the cryptocurrency market, but, for the moment, the future is looking positive.