Bitcoin experienced a significant price increase at the beginning of the week, rising by almost 10% in just a few hours, as concerns about a possible banking crisis abated. The cryptocurrency had briefly dropped below $20,000 on Friday, which was its lowest point since the start of the year.
This decline occurred following the collapse of Silvergate Bank, which was known for its favorable stance on crypto, and fears that Silicon Valley Bank may face similar issues. As a result, investors were spooked.
Bitcoin surged in price after the United States government announced it would protect customer funds. Banking giant HSBC agreed to purchase the United Kingdom operations of SVB. This news caused the broader crypto market to experience similar gains, with Ethereum (ETH), Cardano (ADA) and Solana (SOL) also seeing increases in price.
The bounce back pushed the overall crypto market cap back above the $1 trillion mark. However, thewinding down of Silvergate continues to be a concern for the crypto industry.
Bitcoin’s strong start to 2023 suffered a major setback after Silvergate Bank became the latest casualty of the so-called crypto winter, which has seen the overall market shrink by around $2 trillion. The California-based bank blamed recent industry and regulatory developments for its downfall, saying in a statement last week that “an orderly wind down of Bank operations and a voluntary liquidation of the Bank is the best path forward”. These industry developments include the collapse of the QuadrigaCX cryptocurrency exchange and the US Securities and Exchange Commission’s increased scrutiny of initial coin offerings.
Silvergate’s collapse has left nearly as big a hole in the US cryptocurrency industry as FTX’s did, according to Leo Jakobson from leading crypto price tracker CoinMarketCap.
Cryptocurrency exchanges are struggling to find a way to allow customers to move dollars into their trading accounts, and off-ramp them into their bank accounts.
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