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

All cryptocurrencies’ market capitalization has surpassed $1 trillion once again. The damaged cryptocurrency market turned green after a joint statement from the Federal Reserve, U.S. Treasury, and FDIC stated that all depositors of the now-shuttered Silicon Valley Bank and Signature Bank will be allowed to get their monies out on Monday.

According to data from CoinMarketCap, as of late on Sunday night, Bitcoin (BTC) was up to $22,300 and Ethereum (ETH) was at $1,596, both up around 8% in the previous day.

30 best coins Also rising by over 10% were Cardano (ADA), Polygon (MATIC), Solana (SOL), Litecoin (LTC), Avalanche (AVAX), and Filecoin (FIL). On the other hand, the news appeared to cause reluctance in the conventional financial markets, as the U.S. dollar fell in early Monday trading.

The second most popular stablecoin on the market, US Dollar Coin (USDC), has reclaimed its dollar peg and is once again trading at 99.3 cents on several price indexes. After USDC issuer Circle revealed that it still had $3.3 billion of the cash reserves backing USDC sitting at Silicon Valley Bank, USDC plunged to a new all-time low of 87 cents on Friday night. The weekend decline caused worries about the viability of stablecoins generally and damaged trust in USDC and other stablecoins like USDD and USDP. Even while USDC has recovered, it is not yet certain that those fears have been allayed.

The crypto-friendly Silvergate Bank started to have problems just over a week ago, which is when the present banking instability and contagion may have started. Silvergate shut down its Silvergate Exchange Network after a large number of cryptocurrency businesses that utilised it, including Coinbase, Galaxy, Gemini, and Crypto.com, said they would stop utilizing it. Silvergate declared that it would cease operations on Wednesday.

Two days later, on Friday, the Nasdaq suspended trading in Silicon Valley Bank. The day before, the bank had undergone a $42 billion bank run and was apparently looking for an emergency takeover. Regulators shut down SVB within hours, sending bank and tech stocks plummeting on worries that other local institutions may follow suit. Tech and cryptocurrency businesses all made public announcements about their SVB holdings. Then, on Sunday, the financial watchdogs for New York State swiftly closed down Signature Bank due to a system risk.

Eventually, the Fed, Treasury, and FDIC’s announcement of assistance on Sunday evening seems to have temporarily stopped the hemorrhage in equities and cryptocurrencies: S&P and Nasdaq futures rose significantly in pre-market trading.