The price of Bitcoin is surging, up 19.8% in the past day after regulators and the Joe Biden Administration stepped in to assuage investors that depositors in the failed Silicon Valley Bank would be made whole—and that the U.S. banking system remains on stable ground.
At the time of writing, Bitcoin was trading for $24,428, a near 20% increase in the past day and 6% jump in the past hour, according to CoinGecko. Ethereum, the second largest digital asset, was up 15% in 24 hours; it is up 3.4% in the past hour, priced at $1,680.
The rest of the crypto market is also in the green, with Dogecoin, the ninth largest digital asset by market cap up 11% in the past 24 hours, trading hands for $0.073.
The cryptocurrency market was bleeding last week after uncertainty around Silicon Valley Bank’s crash spooked investors. At one point on Friday, Bitcoin’s price dipped to as low as $19,662.
SVB suffered a $42 billion bank run on Thursday, with the Nasdaq halting trading on the bank’s shares and regulators shuttering the institution by Friday. A number of crypto companies admitted their exposure to the firm through the weekend, sending the prices of every coin and token plunging.
Circle, the issuer of the USDC stablecoin, revealed it had $3 billion stuck in the bank. The stablecoin, the fifth largest digital asset by market cap, lost its peg to the dollar following the news—falling as low as 87 cents at one point.
Then, on Sunday, New York State financial regulators decided to shut down Signature Bank, citing system risk.
But the Federal Reserve, U.S. Treasury, and FDIC said Sunday that depositors of SVB and Signature Bank would be able to get their funds out on Monday—reassuring investors that the situation was under control.
The Biden Administration has insisted that losses incurred by these banks will “not be borne by taxpayers” and should not be considered a “bailout.” After all, shareholders in these banks will be wiped out, and management has been fired.
But not everyone agrees with the administration's description. The Wall Street Journal’s editorial board today did not mince words: “This is a de facto bailout of the banking system, even as regulators and Biden officials have been telling us that the economy is great and there was nothing to worry about.”
USDC has now regained its peg, sparking optimism in investors plugging cash into the digital asset space.