Bitcoin Thrives Despite Bank Turmoil: What Does This Mean?

Alisha Deo

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• Three major financial closures occurred in mid-March, but Bitcoin appears to be rallying despite the turmoil.
• Analysts are offering varying opinions on the situation, with some believing that it could put a damper on Fed plans for further interest rate hikes.
• Not all crypto assets are benefiting from the bank closures, as USDC parent company Circle has encountered problems due to them.

Bank Closures Cause Turmoil

Three major financial closures happened over the course of two weeks in mid-March. The institutions that shut their doors were Signature Bank, Silicon Valley Bank, and Silvergate. Despite all this, crypto assets like bitcoin appear to be rallying.

What Analysts Say About Bitcoin’s Performance

Many analysts are offering different thoughts on the situation, one of which is Alex Kuptsikevich, a senior market analyst at FX Pro. He mentioned in a statement: Bitcoin faces an important test of market sentiment. During the day, we must watch closely to see if we have a clean sell-off by the hawks. If so, it’s an important signal that the recent rally was false and that the big players are still selling at better prices. Potential buyers would still be better off waiting for a fix above $23,000 to confirm a bullish reversal.
The three banks named above are now in the process of being bailed out by institutions such as the Federal Reserve and Treasury Department who issued a joint statement saying: „We are also announcing a similar systemic risk exception for Signature Bank… All depositors of this institution will be made whole.“ Marcus Sotiriou – crypto market analyst at digital asset broker Global Block – also weighed in saying: „It is clear that continued hikes risk further destabilizing the financial system…“

Interest Rates Could Slow Due To Turmoil

Some believe that this turmoil could put a damper in the Fed’s alleged plans to continue hiking interest rates throughout 2023 because higher rates could be too difficult for it to handle right now.

USDC Parent Company Experiences Problems

Not all crypto assets are benefiting from these bank closures though; USDC parent company Circle wrote on Twitter: „Silicon Valley Bank is one of six banking partners Circle uses for managing… ~25 percent portion of USDC reserves held in cash… While we await clarity on how [the] FDIC receivership [of SVB] will impact its depositors…“

Conclusion

While many investors and customers will benefit from these bailouts and institutional interventions into our banking system following these closures, not everyone will win out in this situation; USDC parent company Circle is just one example of those negatively impacted by these events.

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