Bitcoin jumps the most in almost a month after the US supports the banking sector
(Bloomberg) — Crypto markets cooled after Bitcoin battled its highest jump in nearly a month on Monday, following moves by the U.S. government to stem the spread of concerns about the health of the country’s financial system.
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The biggest crypto asset by market capitalization had a 24-hour gain of around 2.6% to $22,044 on Monday morning in London, after gaining as much as 6% in the early hours of March 13 – its biggest gain since the 15th. February. over the weekend, US agencies pledged to fully protect all depositors’ money following the collapse of Silicon Valley Bank on Friday, while the bank’s UK branch was sold to HSBC Holdings Plc for £1 on Monday morning.
Meanwhile, Signature Bank – one of the most prominent US crypto-friendly banks left after Silvergate Capital Corp. shut down earlier this month — shut down by New York state financial regulators on Sunday with access to funds for depositors. The spate of bank closures had jittery crypto markets, with several major crypto companies including Circle Internet Financial, Coinbase Global Inc. and Paxos Inc. suspended.
“The Federal Reserve’s bailout plan has boosted market confidence and eased concerns about the potential collapse of multiple players, especially given that Signature is a major bank in the crypto industry,” said Rachel Lin, co-founder of SynFutures, a decentralized derivatives trading platform.
Bigger gains among smaller cryptoassets known as altcoins also pared, with Cardano’s earlier 8.5% gain retreating to 3.3% and Tron easing to a 7% gain. Bitcoin had recovered from its worst week since November, where a stock selloff, banking sector turmoil and an escalating US regulatory crackdown on crypto combined to hurt investor sentiment.
SVB’s failure triggered a knock-on effect in crypto’s crucial market for stablecoins after Circle, one of the largest operators of USDC, revealed it had $3.3 billion in reserves backing the token stored at the bank. Stablecoins are cryptocurrencies that aim to maintain a one-to-one value with a less volatile asset such as the US dollar, and are an integrated safe haven for crypto investors who want to maintain value without exiting traditional currencies.
The news of SVB’s closure sent Circle’s USDC falling well below the dollar peg – an event equivalent to the stablecoin equivalent of a money market fund breaking the money – and sent shockwaves through the wider sector. By Monday morning, USDC had recovered to trade at around 99 cents.
The token’s depeg sparked a huge surge in volumes on decentralized exchanges on Saturday, thanks to its outsized prominence as a trading pair on such exchanges. Uniswap and Curve, the two leading decentralized exchanges, recorded their highest ever daily trading volume that day, according to data from DeFiLlama, with around $13.3 billion and $8 billion in volume respectively.
Curves 3pool, a liquidity platform that allows traders to exchange three of the market’s top stablecoins on a peer-to-peer basis, accounted for $4.8 billion in trading volume on Saturday. Users lined up to exchange USDC and DAI, a stablecoin backed by cryptoassets instead of actual dollars, for Tether’s USDT, the largest stablecoin by market circulation, after both USDC and DAI lost their dollar pegs over the weekend.
–With assistance from Sidhartha Shukla.
(Updates prices, adds context about banks and decentralized exchange activity from the second tier onwards.)
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