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and other cryptocurrencies rallied on Friday, just as tech-friendly bank Silicon Valley Bank’s former parent company filed for Chapter 11 bankruptcy and stocks dipped amid fears of a banking crisis.
The biggest digital asset by market cap pushed past $27,000 Friday morning Eastern Time. At the time of writing it had dropped to $26,555—a 6.2% 24-hour jump. It is up over 30% in the past week.
Meanwhile, , the second-largest cryptocurrency by market cap, was trading for $1,727, up 4% in the past day—and more than 20% in seven days.
But the stock market isn’t moving in tandem—a shift from the correlation that investors and traders have grown accustomed to in recent years. U.S. equities and bank shares today slid as spooked investors pulled back from their positions due to fears of a potential banking crisis.
Regulators shut Silicon Valley Bank (SVB) last week, sending shockwaves through the financial system.
A number of crypto companies admitted exposure to the firm, which had positioned itself as the tech startup world’s favorite bank. SVB’s former parent company today filed for bankruptcy in a move to seek buyers for its assets.
It came after crypto-friendly bank Silvergate’s March 8 shutdown. Then, following SVB’s failure, New York regulators closed down Signature, another bank which catered to the crypto world—causing trouble for digital asset companies which relied on such firms for access to the traditional finance system.
The banking industry has since been on shaky ground: Swiss Credit Suisse’s stock plunged earlier this week after Saudi National Bank—its biggest lender—said it wouldn’t offer more financial help.
And today, regional U.S. bank First Republic’s stock took a hit as it continues to face a crisis in confidence from investors and customers.
Why is Bitcoin and the rest of the digital asset market doing so well, then?
It could have something to do with the Federal Deposit Insurance Corporation denying reports that prospective purchasers of Signature Bank would have to stop doing business with crypto—sparking investor confidence in digital assets.
And investors may have a renewed appetite for risk: the Federal Reserve’s rate increase cycle could be coming to an end due to the current wobbly situation the banking world finds itself in.
Shipyard Software CEO Mark Laurie told Decrypt that the Federal Reserve’s Bank Term Funding Program—which promises cash for struggling banks—is “effectively restarting quantitative easing, which is what puffed up the crypto and growth assets bubble in the first place.”