• Three major banks closed their doors in mid-March, but Bitcoin appears to be rallying despite the turmoil.
• Analysts are split on whether or not the rally is sustainable. Many believe that the Federal Reserve’s plans for increasing interest rates could be too risky for the current banking system.
• USDC is facing issues due to bank closures, though its parent company Circle has stated that operations continue as normal.
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.
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 the Treasury. In a joint statement, these agencies said: We are also announcing a similar systemic risk exception for Signature Bank, New York, New York , which was closed today by its state chartering authority . All depositors of this institution will be made whole . As with the resolution of Silicon Valley Bank , no losses will be borne by taxpayer .
Marcus Sotiriou – crypto market analyst at digital asset broker Global Block – also threw his two cents into the mix , saying : It is clear that continued hikes risk further destabilizingthe financial system , so th e time in whichthe Fed will need to pause and then pivot could have been moved closerbythe events of last week . Some believ ethat this turmoil could puta damperin th e Fed ’ s alleged plans to continuerisinginterest rates throughout2023 . With so much trouble surroundingthe standardbanking system , higherratescouldbe too difficult for itto handle .
USDC & Circle Issues
That’s good news for investors and customers who won’t suffer any losses from these bank closures; however there’s some bad news as well – assets like USDC are facing problems due to these bank closures. On Twitter , USDC parent company Circle wrote : Silicon Valley Bank is oneofsixbanking partnersCircle usesfor managingthe ~ 25percent portionofUSDC reserves heldincash . While we await clarityonhowth e FDIC receivershipofSVBwillimpactits depositors , CircleandUSDCcontinue to operate normally .
With so much trouble surroundingthe standard banking system , Higherratescouldbe too difficultforitto handle – meaningthatit mightnotbe wisefor th e Fedto continuerisinginterest rates throughout2023as planned ; howeveronly timewilltell ifthisis trulythe case ornot!
In conclusion , whileBitcoinhas appeared torallydespitebank turmoil inthe mid-Marchperiod , therearestillmanyuncertaintiesregardingthesustainabilityofthe rallyandwhatpossible outcomesmayarisefromitinthelongrun ! It’simportanttomaintain closewatchoverthesemarketsastheycontinueto developinordertobereadyforthesepotentiallyvolatilechanges!