Bitcoin and other digital coins continued their impressive rally on Saturday after the parent company of the tech-friendly financial institution Silicon Valley Bank filed for bankruptcy on Friday.
The largest crypto by market capitalization pushed past $26,000 yesterday for the first since last June. On Saturday morning, Bitcoin had gone beyond the $27,000 mark, and as of this writing, it is trading at $27,689, up 36% over the past seven days.
Meanwhile, the second-biggest crypto by market capitalization, Ethereum, is changing hands for $1,830, up 5% in the last 24 hours, and has posted 27% gains in the past week.
However, this time round, the stock market failed to a similar trend. The bank shares and US equities dropped on Friday following investors’ rush to sell off their positions because of fears of a possible banking crisis.
The Banking Crisis
US regulators shuttered Silicon Valley Bank last week, causing panic in the financial system.
Several crypto firms admitted exposure to the bank, which was favored by many tech startups. But yesterday, Silicon Valley Bank’s parent firm filed for bankruptcy in an effort to seek purchasers for its assets.
Prior to Silicon Valley Bank’s failure, crypto-friendly bank Silvergate was forced to cease operations, and a few days later, another financial institution that catered to the crypto industry, Signature Bank, was shuttered by the New York regulators, causing more problems to crypto firms that depended on those banks to access the traditional finance system.
Generally, the banking sector has been on shaky ground. Earlier this week, Swiss Credit Suisse’s shares declined sharply after its largest lender Saudi National Bank decided it would not offer further financial assistance.
Moreover, First Republic Bank’s shares took a hard hit yesterday as customers and investors continued to lose confidence in the company.
Why Crypto Market is Booming
The increase in crypto prices could be resulting from the Federal Deposit Insurance Corporation, which denied claims that all interested purchasers of Signature Bank must not be involved in crypto, thus boosting investor confidence in cryptocurrencies.
There is also a belief among traders that Federal Reserve will only hike interest rates by 25 basis points due to the ongoing banking crisis.