SVB collapse: Crypto stages massive rally in wake of bank failures

Bitcoin AOther cryptocurrencies During this time, they have made huge gains The fallout Silicon Valley Bank collapse.

Bitcoin surged amid rising fears about the bank system. Bitcoin hit $26,400 on Tuesday. This is a staggering 34% rise from Friday’s implosion at SVB. Ethereum had similar gains, reaching $1,780 earlier on Tuesday — 29% higher than Friday’s trough.

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Bitcoin evangelists claim that cryptocurrency and other blockchain-based technologies are a safer alternative to traditional banking systems that are susceptible to problems such as the one that struck SVB.

Bitcoin is also immune to the bank run that many were afraid would occur on Monday, if the federal government didn’t rush in to make sure all SVB clients got their money back. People would rush to withdraw their money at a rate that could lead to a financial crisis if that happened.

Social media was used by crypto apologists to promote digital assets as being resilient in the midst of banking chaos.

“We are seeing a huge flow of new customers. People are realizing the importance of sound money with no counterparty risk,” crypto exchange River Financial tweeted.

Another crypto enthusiast called it the rise a “historic pump” Tweeted that Bitcoin offers a “safe harbor to those fleeing debasement and counterparty risk.”

John Berlau is a senior fellow at the Competitive Enterprise Institute and director of finance policy. Washington Examiner The SVB collapse may mean that inflation could persist for longer. Because of the volatility of the market, the Fed will likely avoid more aggressive rate hikes. This could mean that prices may remain high for longer.

One week ago, investors were expecting a more aggressive rate increase. CME Group’s FedWatch Tool calculates the probability of no rate rise using futures contracts prices. The tool is used by Fed officials to estimate the probability of no rate increases.

Tuesday’s consumer prices index report, which tracks prices over the past month, came back lighter than usual. The inflation rate was 6.4% in the previous month, but has dropped to 6% now. The persistently falling inflation would lend credibility to lower rate hikes.

Moody’s Investors Service has changed its outlook on the U.S. bank system from stable, to negative, on Tuesday.

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“We have changed to negative from stable our outlook on the U.S. banking system to reflect the rapid deterioration in the operating environment following deposit runs at Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank (SNY) and the failures of SVB and SNY,” Moody’s reported on the matter.

It stated that it is currently examining half a dozen other banks in order to determine if they should be downgraded.