Cryptocurrencies rise after US authorities intervene to restore confidence in banking sector following collapse of Silicon Valley Bank
The value of major cryptocurrencies rose on Monday after US authorities instituted emergency measures to limit the effects of the collapse of Silicon Valley Bank (SVB), even as industry watchers said volatility was likely to continue.
US government and financial agencies over the weekend introduced measures aimed at stabilising confidence in the banking system after the SVB failure threatened to lead to further bank runs.
The failures of SVB along with those of Silvergate Bank last week and Signature Bank on Sunday are a blow to crypto companies, who relied on such institutions for access to banking services.
All three of the banks had been counted at some time as the US’ most crypto-friendly financial institutions, although Signature had begun to pull back from its exposure to digital assets following the collapse of the FTX exchange last year.
The three banks had facilitated the liquidity of digital assets, which can otherwise be complex to exchange for fiat currencies.
Sunday’s US government measures included the assurance that all customers of SVB and Signature would have access to the entirety of their deposits on Monday.
Bitcoin was up around 8 percent on Monday morning from its lows of Sunday, while second-ranked Ether and smaller tokens were also trading higher.
But analysts said the fallout from three major crypto-related bank failures in the space of less than a week was likely to continue.
“Markets remain unsettled from the SVB failure,” said RBC Capital Markets head of FX strategy Alvin Tan in a research note. “The situation is evolving, but volatility looks set to remain elevated in coming days.”
New York’s chief financial regulator took possession of Signature Bank on Sunday, following the collapses of SVB and California’s Silvergate Bank last week.