Bitcoin (BTC) begins a new week with a bullish surge above $22,000 as the Federal Reserve injects liquidity into the United States economy.
In a move which can rival any classic Bitcoin comeback, BTC/USD is up a full 15% off the two-month lows seen on March 10.
The volatility — and at least temporary relief for bulls — is all due to events in the U.S. after the failure of one bank and the forced halting of another’s operations.
Silicon Valley Bank and Signature Bank are the latest victims in a brutal year for financial institutions under the Fed’s rising interest rates — will the trend continue?
Despite Signature being crypto focused and a major on-ramp from fiat, crypto markets have so far seen no reason to abandon optimism at the prospect of the Fed providing fresh money.
Not everyone, however, believes that this constitutes a “pivot” on interest rate hikes or overall policy.
As the dust continues to settle and news floods in from the ongoing events, Cointelegraph breaks down the main factors moving BTC price in the short term.
Fed bails out Silicon Valley Bank depositors
The story of the moment is of course the fallout from Silicon Valley Bank (SVB) failing late last week.
Swallowing hundreds of billions of dollars in deposits, SVB was forced to take a giant $1.8 billion loss thanks to parking consumer funds in mortgage-backed securities, the price of which also suffered thanks to the Fed’s rate hikes.
A snowball effect soon began as depositors became wary that something might be wrong in terms of liquidity. Everyone attempted to withdraw from SVB at once, and the funds were unavailable, necessitating sale of assets at a loss and an emergency funding round which ultimately failed.
The result has come in the form of the Fed stepping in to backstop depositors’ money. On March 12, it announced the “Bank Term Funding Program” (BTFP).
“Depositors will have access to all of their money starting Monday, March 13,” an accompanying joint statement from the Department of the Treasury, Fed Board and Federal Deposit Insurance Corporation (FDIC) confirmed.
“No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”
@federalreserve @USTreasury @FDICgov issue statement on actions to protect the U.S. economy by strengthening public confidence in our banking system, ensuring depositors’ savings remain safe: https://t.co/YISeTdFPrO
— Federal Reserve (@federalreserve) March 12, 2023
As market commentators were…
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