Crypto Market Rallies on FDIC Banking Intervention, USDC Regains Dollar Peg – Decrypt

Crypto Market Rallies on FDIC Banking Intervention, USDC Regains Dollar Peg – Decrypt

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The market capitalization of all cryptocurrencies is again above the $1 trillion mark.

Following a joint statement from the The Federal Reserve, the US Treasury and the FDIC stated that all depositors of the now closed Silicon Valley Bank and Signature Bank will be able to withdraw their funds on Monday, the battered crypto market turned green.

On Sunday night, Bitcoin (BTC) rose to $22,300 and Ethereum (ETH) to $1,596, both up around 8% over the past 24 hours, according to price data from CoinMarketCap.

The top 30 coins Cardano (ADA), Polygon (MATIC), Solana (SOL), Litecoin (LTC), Avalanche (AVAX), and Filecoin (FIL) are also up more than 10%.

On the contrary, the news appeared to raise doubts in traditional financial markets, with the US dollar immersion in early trading on Monday.

The US Dollar Coin (USDC), the No. 2 stablecoin in the market, has regained its peg to the dollar, returning to a price of 99.3 cents across multiple price indices. USDC had plunged to a new all-time low of 87 cents on Friday night after USDC issuer Circle revealed it still held $3.3 billion of USDC-backing cash reserves at Silicon Valley Bank.

The weekend drop shook confidence in USDC and other stablecoins like USDD, USDP and raised questions about the viability of stablecoins in general. It is not yet certain that those doubts will be resolved just because the USDC has rallied.

The current banking chaos and contagion arguably began just over a week ago when crypto-friendly Silvergate Bank showed signs of trouble. After numerous crypto companies using Silvergate (including Coinbase, Galaxy, Gemini, and Crypto.com) they said they would stop using it, Silvergate shut down its Silvergate Exchange Network. By Wednesday, Silvergate said that close their operations.

Just two days later, on Friday, the Nasdaq halted trading in Silicon Valley Bank, which experienced a $42 billion bank run the day before and reportedly looking for an emergency acquisition. Within hours, regulators had shut down SVB, sending banking and technology stocks to take a dramatic hit amid fears that other regional banks were in trouble. Multiple publicly announced crypto and tech startups if they had money in SVB. Then on Sunday, New York state financial regulators abruptly shut down Signature Bank, citing system risk.

Finally, Sunday night’s announcement of Federal Reserve, Treasury and FDIC aid seems to have stopped the bleeding in cryptocurrencies and stocks for now: S&P and Nasdaq futures rose sharply in premarket trading. .

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