The value of major cryptocurrencies rose on Monday following US government plans to protect Silicon Valley Bank and Signature Bank depositors.
The Federal Reserve issued a pair of statements Sunday with a clear message: Silicon Valley Bank depositors, insured and uninsured, will receive assistance in a way that will “fully protect” their deposits.
The risk of banking contagion was lower at the start of the week than last Friday, but not zero.
Following a rise in the price of bitcoin and other crypto assets, the global crypto market surpassed $1 trillion in value on Monday, up around 14% day-on-day.
In the past 24 hours, bitcoins rose 18.4% to over $24,000, while ether rose 15% to around $1,700, according to data from CoinMarketCap. The two cryptocurrencies, which are the largest in terms of market capitalization, trade alongside each other.
Picture credits: CoinMarketCap (Opens in a new window)
USDC, the second largest stablecoin, also recovered about 4% over the past 24 hours after the deposit protection announcement, data from CoinMarketCap showed.
The purported stablecoin broke off its $1 peg for three days, dropping as low as 88 cents, after uncertainty swirled around USDC’s $40 billion empire and the company shared that $3.3 billion, or about 8.2%, of its total supply of reserves was held in SVB.
Circle announcement reserve risk was “removed” as funds became available on Monday morning.
“Trust, security, and 1:1 redeemability of all USDC in circulation are of paramount importance to Circle, even in the face of banking contagion affecting crypto markets,” said Jeremy Allaire, co-founder and Circle CEO, in a statement. “We are encouraged to see the U.S. government and financial regulators taking critical steps to mitigate risks to the banking system.”
USDC’s market capitalization is around $40.5 billion, with $10.9 billion in daily trading volume, down 1% in the last 24 hours, according to data from CoinMarketCap. At press time, the USDC was within millicents of its $1 peg at $0.993, up 3.9% in the past 24 hours.
The crypto market, alongside other major industries, had a volatile week after Capital Silvergate, one of the largest banks to provide services to crypto companies, has shared that it is winding down its operations and liquidating its banking division.
Shortly after, Silicon Valley Bank collapsed on Friday and Signature Bank, a major crypto lender, was shut down by regulators on Sunday.
However, this market turmoil apparently supported the crypto market as traders reacted positively to the news and the overall market capitalization rose on Monday.
