Fed intervention and cryptocurrencies: Bitcoin rises 8% and prices soar on Monday (13)
CriptoFácil – After a hectic weekend among cryptocurrencies, this Monday (13) dawned on a high again. According to data from CoinGecko, BTC price has surged by over 8% in the last 24 hours, returning to the $22k level. In Brazil, the price of Bitcoin is quoted at R$ 115,657.
The weekend was one of ups and downs for cryptocurrencies. Reflecting the situation for US banks, last Friday and most of the weekend cryptocurrencies were down. The liquidity crisis of banks such as Silvergate, the largest partner of cryptocurrencies in the banking network, but also other major banks such as Silicon Valley Bank and Signature, destabilized the crypto market.
This Sunday, however, the price of Bitcoin rose again after an emergency announcement by the Federal Reserve, the board of the United States central bank. According to the Fed, the federal government of the United States initiated a series of measures to protect depositors from the collapse of the banks in question. According to the official announcement, more than US$ 25 billion in funding will be allocated to support banks and depository firms from the full collapse.
intervention of millions
The announcement comes shortly after Silicon Valley bank announced a mass sale of its assets to raise additional capital. The announcement generated a new bank run, due to the panic of depositors. Days earlier, the Silvergate bank had also announced a lack of liquidity.
Also according to the announcement, the purpose of the funds is to guarantee the liquidity of banking institutions and cover the needs of their customers. The Fed Board said it created a Term Bank Financing Program (BTFP), offering loans of up to one year to “banks, savings associations, credit unions and other eligible depository institutions.” The collateral required by the Fed for the loan to be made is only US Treasuries, agency debt and mortgage-backed securities that will be valued at the price at which the assets were issued.
Shortly after the Fed’s announcement of the bank recovery plan, cryptocurrencies rose again. In a few hours, the capitalization of the crypto market rose by more than 6%, returning to R$ 5.47 billion. The price of Bitcoin also rose exponentially and most cryptocurrencies dawned with a positive balance
Bitcoin Rising, Crypto Rising, and Financial Crisis
Even though it’s a high-risk, high-volatility asset, cryptocurrency investors don’t seem to care. Shortly after the US banking crisis was taken over by the Fed, most cryptocurrencies rose again. According to CoinGecko, the new rise in BTC also boosted the price of alternative cryptocurrencies such as , , , among others.
The price of BTC surged by 8.3%, in parallel with the BTC price increase. According to CoinGecko, the price of ETH was BRL 8,249 around 9 am.
The price of BNB and Cardano () coins also saw a rise similar to that of BTC. According to the data, while the price of BNB soared by 7.4%, ADA was trading 8.8% above last Sunday’s price. The Lido Staked DAO also registered a similar increase, of 8.1% in 24 hours.
The currencies, Polygon (MATIC) and (DOGE), despite being part of the top 10 economies, had a more moderate increase. XRP, for example, was barely up on the day, rising just 0.6%. Meanwhile, MATIC and DOGE tokens were up 4.6% and 5.3% respectively.
Outside the top 10 among economies, but still within the most famous cryptocurrencies in the market, the coins (SOL), (DOT) and (SHIB) registered an increase between 4% and 7%.
USDC loses parity with the dollar
The current market crisis has also reflected in a loss of parity for USDC, a stablecoin backed by the . Last Sunday afternoon, the cryptocurrency that was sold 1 to 1 with the US dollar recorded a significant price drop.
The drop came shortly after Circle, the stablecoin issuer, announced that it planned to participate in the recovery of Silvergate bank. The announcement had been made by CEO Jeremy Allaire. Circle, which also has an undisclosed amount of assets in the bank, pulled out of the plans shortly after the Fed intervened.
The damage to the stablecoin peg, however, had already been done. According to CoinGecko, the coin dropped as low as $0.97 and has yet to fully recover.