The value of major cryptocurrencies rose on Monday in the wake of the US government’s plans to protect depositors at Silicon Valley Bank and Signature Bank.
The Federal Reserve issued a pair of statements Sunday with a clear message: Silicon Valley Bank depositors, both insured and uninsured, will be helped in a way that will “fully protect” their deposits.
The risk of bank contagion was lower at the beginning of the week than last Friday, but not zero.
Following a rally in the price of bitcoin and other crypto assets, the overall crypto market exceeded a trillion dollars in value on Monday, up 14% day-over-day.
In the last 24 hours, bitcoins increased 18.4% to more than $24,000, while ether It was up 15% to around $1,700, CoinMarketCap data showed. The two cryptocurrencies, which are the largest by market capitalization, trade in parallel.
Image Credits: CoinMarketCap (Opens in a new window)
USDC, the second largest stablecoin, also rallied about 4% in the last 24 hours after the news that deposits would be protected, CoinMarketCap data showed.
The alleged stablecoin de-pegged from its $1 peg for three days, hitting 88 cents, after uncertainty circulated around the $40 billion USDC empire and the company shared that $3.3 billion, or around the 8.2% of its total reserve supply was held at SVB.
Circle Announced reserve risk has been “eliminated” since the funds became available Monday morning.
“Trust, security, and the 1:1 redemptability of all USDC in circulation are of the utmost importance to Circle, even in the face of bank contagion affecting crypto markets,” said Jeremy Allaire, Co-Founder and CEO of Circle, it’s a statement. “We are encouraged to see the US government and financial regulators take crucial steps to mitigate risks spilling over from the banking system.”
USDC’s market capitalization is roughly $40.5 billion, with $10.9 billion in daily traded volume, down 1% over the past 24 hours, according to data from CoinMarketCap. At press time, the USDC was within thousandths of its $1 peg at $0.993, up 3.9% over the past 24 hours.
The cryptocurrency market, along with other major industries, had a volatile week after Silvergate Capital, one of the largest banks serving cryptocurrency businesses, announced that it was winding down its operations and liquidating its banking division.
Soon after, Silicon Valley Bank collapsed on Friday, and regulators shut down Signature Bank, a major cryptocurrency lender, on Sunday.
However, this market turmoil has apparently propped up the crypto market, as traders responded positively to the news and overall market capitalization rose on Monday.
