On March 17, the prices of Bitcoin rallied explosively, setting several multi-month highs as the flagship crypto continued to extend its recent gains. The world’s biggest digital currency surged past $27,300 around 6:15 p.m. EDT.
At this point, the crypto was trading at its highest since June 2022 and had gained nearly 35% in the last seven days. The digital currency surged to this level after reaching a previous nine-month high of almost $27,000 around 8 a.m. EDT this morning.
After exploding to this multi-month high, Bitcoin pulled back slightly, dropping below $26,200 within a few hours. But, after suffering this drop, it has since resumed its upward trend, rising above $27,700 at the time of writing.
The biggest crypto recorded these gains after a turbulent week where many banks suffered significant failures. Earlier this month, Silvergate Capital Corporation announced plans to liquidate Silvergate Bank, insisting that it planned to return all deposits to the account holders.
This troubled lending firm suffered from a wave of account holders withdrawing their money after the announced bankruptcy of the FTX crypto exchange, according to Reuters.
Moments after that announcement, the markets suffered another massive blow as the California Department of Financial Protection and Innovation quickly shut down Silicon Valley Bank, putting the Federal Deposit Insurance Corporation in charge to guarantee that users and entities holding the insured deposits there would get their money back.
Up until recent weeks, SVB was one of the biggest banks in the US, as highlighted by USA Today. On March 12, investors got the latest round of bank-related news, as the New York Department of Financial Services took charge of Signature Bank, which had more than $100 billion in assets.
In that context, the FDIC by default became the receiver of the financial institution, which previously had 40 branches in states across the US. On March 13, the FDIC stated that account holders could access all deposits that were held by SVB, irrespective of whether they were fully insured or not.
Because of what happened, the US federal government decided to support $175 billion worth of deposits in a move that has been dominated by controversy, according to NPR.
On the other hand, Switzerland-based Credit Suisse has been struggling with different issues. The bank recently accepted an offer to borrow more than $50 billion from the European nation’s central bank, money that it will use to undergo an extensive reorganization.
The Swiss National Bank said it will offer this support since Credit Suisse “meets the higher capital and liquidity requirements applicable to systemically important banks.”
First Republic Bank, which had over $200 billion worth of assets at the end of last year, also made headlines this week when a high-profile consortium of major financial institutions said that they planned to deposit $30 billion into the struggling institution, which caters to wealthy individuals.
Buy Bitcoin NowFOMC Fears
Market participants are also keeping an eye on how high the Federal Reserve officials will increase benchmark rates, a development that has widespread implications for lending costs and thus the entire economy.
While the above-mentioned government officials have promised to bring red-hot inflation under control, surging borrowing costs may easily slow down growth, possibly pushing the United States economy into a recession.
Moreover, higher benchmark rates may readily create headwinds for risk assets like digital currencies and stocks, which do not pay any investor yields.
Investors globally have been watching the Fed keenly to see how high they will push the target range for the benchmark federal funds rate.
Later this month, market observers will be watching to hear the latest rate decision from the Federal Open Market Committee (FOMC).
