Bank sector stress may provide a bullish case for cryptocurrencies. Here’s how 

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Greetings! Welcome back to the Distributed Ledger. This is Francis Yu, crypto reporter at MarketWatch.

A lot has happened over the past week – Silicon Valley Bank of California SIVB

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The second largest bank failure in US history and New York-based Signature Bank collapses at SBNY

was shut down by state regulators. Both happened days after the crypto-friendly Silvergate Bank SI

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Said it would shut down its operations.

The Federal Reserve on Sunday announced an emergency loan program for backstop depositors at both institutions and in the banking system.

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Still, investors remain worried about other banks. First Republic Bank FRC

shares lost nearly one-third of their value on Thursday after Bloomberg informed of That the bank is exploring its strategic options including possible sale of the company. Shares stabilize after Wall Street Journal informed of The largest banks in the US are discussing a joint rescue for the lender.

Meanwhile, Credit Suisse C.S.

said on Thursday that it would borrow up to $54 billion from the Swiss Central Bank Boost its liquidity after its stocks and bonds fell on Wednesday.

Amid such stress in the banking system, bitcoin rallied more than 30% in three days from nearly $20,000 on Sunday to above $26,000 on Tuesday, according to CoinDesk data, before pulling back slightly. Pulled off and traded slightly below $25,000 on Thursday.

As always, find me on Twitter here @FrancesYue_ Feel free to share any thoughts on crypto, this newsletter, or your personal stories with digital assets.

Bullish Catalyst for Bitcoin?

Akbar Thobani, CEO of SFOX, said that the recent collapse of several banks has highlighted the potential use cases of blockchain technology.

“What the blockchain does is it brings two people who have no reason to trust each other together to be able to transact,” Thobani said in a call. .

“Generally, banks fulfill that need where you trust the bank to hold your money and be able to conduct transactions. But if that trust wavers even slightly, we’ve seen what happens to banks in less than 48 hours.

Notably, bitcoin showed resilience in the recent turmoil, which may support the argument that although crypto is not an inflationary hedge, it is a hedge against “monetary irresponsibility,” say analysts at crypto trading firm QCP Capital. wrote in Thursday’s note.

Thobani attributed bitcoin’s recent rally partly to damage to some investors’ confidence in banks.

Over the past weekend, some investors were unsure which banks were safe. “I think a lot of people have decided that they will go to crypto so that they will be able to withdraw coins on the weekend if they have to, as opposed to waiting until Monday morning when the banks come online with all the uncertainty. are,” Thobani said.

Crypto trades 24 hours a day, seven days a week, while banks are typically closed and do not process payments on weekends and federal holidays.

To be sure, bitcoin is still highly volatile — the crypto’s prices are down more than 60% from their all-time highs in 2021, according to data from CoinDesk.

And the crypto industry is no different from the banking sector’s problems.

The shuttered Silvergate, Signature and Silicon Valley Bank were once considered among the most crypto-friendly banks in the US, although Signature has been cutting down on its crypto-related deposits following the collapse of exchange FTX in November.

“landscape [of banking for crypto] That has definitely changed,” said Bobby Zagota, CEO of Bitstamp USA.

The collapse of Signature and Silvergate could make it more difficult for institutions to buy cryptocurrencies with fiat currencies and restrict liquidity on crypto trading platforms. Marketwatch’s Anushree Dave and I have written more about this here.

crypto in a snap

According to data from CoinDesk, bitcoin gained 17.6% in the past week and was trading at around $24,750 on Thursday. Ether increased by 12% during the same period to around $1,662.

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Source: CoinGecko

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Frax Shares






Source: CoinGecko

crypto companies, funds

Coinbase Global Inc. COIN Shares

Up 16% for the week to around $67.33. Microstrategy Inc. MSTR

For the week so far, it is up 14.4% to $241.25.

Crypto mining company Riot Blockchain Inc. riot

climbed 27% to $7.04 on Thursday. Rival Marathon Digital Holdings Inc. Mara’s shares

Up 39% over the past week to $7.65. Ebang International Holdings Inc. ebon

12% higher over the past week to $6.74. Inc. Shares OSTK

During the week it fell 0.9% to $17.93.

Block Inc. class shares,
Formerly known as Square, is up 2.6% to $75.69 so far this week. Tesla Inc. TSLA

Shares rose 7% to $184.99.

PYPL of PayPal Holdings Inc.

The stock was trading at around $74.25, down 2.2% during the week. Nvidia Corp’s NVDA

For the past week, up 8% to $253.06.

Advanced Micro Devices Inc. amd

Shares rose 14% to $96.03 for the week.

Among crypto funds, ProShares Bitcoin Strategy BITO

Soared 25% on the week to $15.36 Thursday, while the peer Short Bitcoin Strategy ETF BITI

fell 24% to $24.03. Valkyrie Bitcoin Strategy ETF BTF

The VanEck Bitcoin Strategy ETF XBTF surged 25% in the past week to $9.81.

jumped 25% to $25.

Grayscale Bitcoin Trust GBTC

It has gained 21% in the past five days to $14.06 on Thursday.


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