There was a fast recovery in Bitcoin price with the statement that depositors will be safeguarded at the Silicon Valley Bank and the expectation of a 25-basis point rate hike from the Fed on March 22. One of the biggest cryptocurrencies in the world increased 8.7% each day to $ 22,455. In actuality, the price of Bitcoin at the time this article was written was $25,940.83. As a result, it eliminated all losses from the previous week.
How Has the Bitcoin Price Been Affected by the Recent Events?
Gold and cryptocurrency demand soared with the collapse of Silicon Valley Bank, Silvergate Bank, and Signature Bank in the US. Today, cryptocurrencies began to move quickly. Bitcoin climbed to a nine-month high of $26,501. In short, with the SVB crisis under control, the Bitcoin price has skyrocketed.
The Collapse of Silicon Valley Bank
Traders have been following the events at Silicon Valley Bank in the US with great attention in recent days. The most important reason for this was that Circle, the issuer of USDC, the second-largest stablecoin by market capitalization, had $3.3 billion in reserves at SVB.
Following the SVB’s collapse, concerns about what would happen to this reserve grew, leading to significant sales of USDC. Because of this, USDC failed to maintain its value at $1 as it should have and dropped below $ 0.90 on Saturday. This caused a loss of confidence and sales in the general cryptocurrency market.
However, in response to the SVB problem, the US Federal Reserve (Fed) and US Treasury Department intervened. The market volatility stopped after it was revealed that depositors could withdraw their money despite the bankruptcy, which increased the value of cryptocurrencies, especially Bitcoin.
Why is Bitcoin Price on the Rise?
Investors looking for alternate returns have been looking to cryptocurrencies for the past four days. The increase in cryptocurrencies quickened following today’s US inflation statistics. On March 14, US February inflation figures were announced. While inflation was 6% on an annual basis, it was observed as 0.4% on a monthly basis. After the inflation data, sharp rising were recorded in the cryptocurrency exchange. For example, Bitcoin rose to $ 26,386. Thus, the popular coin achieved its highest value in the last nine months.
On the other hand, Fed Chairman Jerome Powell said in his presentation to the Senate Banking Committee that the Fed would raise interest rates at a higher rate than expected to rein in inflation. Moreover, Circle recently announced that USDC operations have returned to normal and that it has partnered with Cross River Bank as part of its commitment to expand its banking partners. In light of Circle’s announcement, the value of Bitcoin rose to $ 22,455.
New tendencies that we haven’t seen before are emerging as the crypto sector gets more established. Bitcoin, which was once considered a niche asset, is now behaving more like a traditional asset. Also, it becomes susceptible to the same market factors that impact mainstream markets.
Bitcoin’s price is impacted by changes in the overall state of the economy as well as international events that have an impact on established markets, in addition to news about institutional use and restrictions of cryptocurrencies. For example, global events such as the collapse of Silvergate Bank, Silicon Valley Bank, and Signature Bank have affected the price of Bitcoin.
Even if these events don’t directly affect the price of Bitcoin, they will affect other cryptocurrencies, which in turn will affect Bitcoin. In summary, the last quarter of 2022 and the first quarter of 2023 were very volatile for the price of cryptocurrencies, particularly Bitcoin.