Weekly Market Wrap: Bitcoin, Ether on The Rise as U.S. Regulators Protect Depositors

Bitcoin and Ether, along with other top 10 non-stablecoin cryptocurrencies by market capitalization, gained in this Monday’s afternoon trade in Asia following the news that US regulators had taken over Silicon Valley Bank and Signature Bank, which both have exposure to the crypto industry. The regulators protected deposits and confirmed that no losses would be borne by taxpayers.

Bitcoin, the largest cryptocurrency by market capitalization, rose by 9.9% to US$22,555 in 24-hour trade to 4 p.m. in Hong Kong, taking its total weekly gains to 0.68%. Ethereum also increased by 9.64% to US$1,614 on the day and 3.3% on the week, according to CoinMarketCap data.

Cardano’s ADA token led gains at 12.04% to trade at US$0.3412. Solana was the second-biggest gainer, rising 10.3% to US$19.83 but lost 4.57% on the week. The global crypto market cap increased by 8.97% to US$1.03 trillion, while the total crypto market volume rose 21.66% to US$77.36 billion.

Most Asian equity markets rose on Monday, boosted by higher U.S. stock futures and U.S. Treasury Secretary Yellen's statement that the government would protect depositors at the collapsed Silicon Valley Bank. Hong Kong’s Hang Seng Index led gains at 1.95%. The Shanghai Composite strengthened by 1.2%, and the Shenzhen Component Index rose by 0.55%. Japan’s Nikkei 225 dropped 1.11%, while South Korea’s Kospi inched up 0.67%. Investors are waiting for the U.S. Federal Reserve's meeting on March 22 to decide on interest rate increases and the direction of the economy.

Interest rates in the world’s largest economy are at 4.5% to 4.75%, the highest since October 2007, and are expected to increase by another 25 basis points. Investors are also waiting for U.S. inflation data on Tuesday and the European Central Bank’s meeting on Thursday for signals on global financial policy. 

Signature Bank Forced into Closure by U.S. Regulators

Another bank that catered to the crypto industry, Signature Bank, has been forced to close down, following the shutdown of Silvergate Bank and Silicon Valley Bank. Many crypto firms shifted to Signature Bank after Silvergate Bank faced operational difficulties earlier this month. Like with Silicon Valley Bank, the US government has fully bailed out Signature Bank’s depositors due to a “systemic risk exception,” ensuring that taxpayers will not bear any losses associated with the bank. The bank’s shareholders and certain unsecured debtholders will not be protected, and senior management has been removed. The measures taken are intended to boost public confidence in the banking system and ensure its continued role in the economy, according to a joint statement by the Federal Reserve, Treasury Department, and Federal Deposit Insurance Corporation.

According to the Financial Times, Signature Bank’s managers were surprised to see their bank placed into receivership. The firm faced significant outflows amid a major stock selloff on Friday, fueled by panic over Silicon Valley Bank. However, the situation reportedly stabilized by Sunday.

Binance to Convert $1B of Industry Recovery Initiative Funds To BTC, ETH, BNB

Binance CEO Changpeng "CZ" Zhao has announced that Binance will convert the remaining funds in the Industry Recovery Initiative into Bitcoin (BTC), BNB, and Ethereum (ETH) due to the collapse of crypto-friendly banks and stablecoin depeg events. This decision was made in response to the bank and stablecoin crisis.

According to Etherscan data, the wallet linked to Binance's Industry Recovery Initiative had 985,088,975.25 BUSD worth $979,867,018.59, and Binance initiated the BUSD conversion through Uniswap on March 13. CZ believes that the recent closure of Silvergate Bank, Silicon Valley Bank, and Signature Bank seems to be a "coordinated effort to shut down crypto-friendly banks." 

XBO Featured Coin of the Week – USD Coin (USDC)

Circle, a popular issuer of stablecoins, has recently announced that the $3.3 billion in USD Coin (USDC) reserve deposits held with Silicon Valley Bank (SVB) will be fully recovered when banks reopen in the United States on Monday. This accounts for approximately 8% of the total USDC reserves. Circle made this announcement in a press release, which also mentioned that it has no cash reserves at Signature Bank, which was also taken over by the Federal Deposit Insurance Corporation (FDIC) over the weekend.

To help address this situation, Circle has formed a new partnership with Cross River Bank in New Jersey, through which automated USDC minting and redemption for customers will begin today. Circle's CEO, Jeremy Allaire, has confirmed that 100% of USDC reserves are safe and secure and that the company will transfer the remaining SVB cash to BNY Mellon. Liquidity operations for USDC have resumed.

Following Circle's announcement about its reserves at SVB, the price of USDC fell to $0.8774 over the weekend but has since recovered to $1.00. Silicon Valley Bank and Signature Bank are both key crypto-lenders, and their closure has caused concern in the industry. SVB, with assets worth more than $200 billion, is the largest banking failure since the 2008 financial crisis. Despite this setback, USDC remains one of the largest cryptocurrencies on the market, with a market capitalization of more than $40B and the second largest stablecoin in the market.

Disclaimer: Our content does not constitute financial advice. It is only intended for informational and educational purposes.