In today’s bitcoin and cryptocurrency news, read about how markets have been caught off guard by Bitcoin (BTC), with its recent surge back above $20,000 being called a “Cyprus moment” as investors seek alternatives to the risky fractional reserve banking system. Meanwhile, the sudden failure of Silicon Valley Bank caused widespread fear throughout the tech sector. But executives and investors in crypto, who have been through a year of almost constant chaos, jumped at the chance to lecture and criticize.
3 Factors Behind Today’s Bitcoin Price Increases
Original Source: 3 Reasons Crypto Prices are Rising Today – New Bull Market Starting?
Fears that a series of banking crises might spread have captivated financial markets in recent days.
Following a run on deposits in November, Silvergate Bank’s SEN payment network (essential crypto industry infrastructure) was closed.
Silicon Valley Bank, the 16th largest bank in America and a source of start-up finance and VC investment, collapsed soon after.
Once terrible data about SVB’s bond portfolio performance in high-interest rates emerged, deposits also ran out.
Concerns about a banking contagion arose after the worst banks failure since 2008.
Friday saw US bank equities fall as much as 35%.
Many US bank equities have been stopped today due to this impact.
When the Dow Jones and NASDAQ fell, the S&P500 went negative year-to-day.
As investors seek safer havens for cash outside of the fractional reserve banking system, Bitcoin (BTC) has stunned markets with a surge back above $20,000.
Three explanations explain why crypto prices are rising despite this week’s banking upheaval.
1. Circle Puts SVB Worries To Bed
Today, the FDIC began selling SVB assets to reimburse up to 50% of SVB consumers’ deposits.
USDC holders who watched USDC depeg over the previous several days will be relieved.
Once Circle tweeted about their Silicon Valley Bank exposure, they were depegged.
When investors fled USDC, its value plummeted to $0.87, causing industry chaos.
USDC repegged during the weekend, rising to $0.99.
Coinbase re-established 1:1 USDC:USD trade this afternoon, although fiat USD will remain unconverted.
On Sunday, Circle CEO Jeremy Allaire said that SVB will release $3.3bn (8% of Circle’s assets) today.
Crypto markets have been reassured by Circle’s apparent escape from Silicon Valley Bank’s worst.
On-Chain Sentiment: Sell-Off Is Over
For over a month, Bitcoin (BTC) price activity has been subdued by severe sell pressure, but the worst may be over.
Bitcoin has seen 25 days of net inflow onto exchanges, On-Chain. This implies more Bitcoin has gone into exchanges than off them for 25 days (into cold storage). As investors sell their Bitcoin on exchanges, this is a sell-off signal.
Yet, as of yesterday, the global exchange net position shift has finally turned to net outflow, a clear accumulation indication.
Exchange balance as a percentage of supply (11%) is at its lowest level since December 2017, indicating that these outflows are part of a larger Bitcoin accumulation trend.
Superior? The Silicon Valley Bank catastrophe looks to have shaken out weak hands in the space.
Bitcoin’s hold waves show maturing supply with recently active supply driving daily price action.
Those powerful hands? With 1 million “wholecoiner” addresses, accumulation is in full gear.
On-Chain sentiment indicates an end to the sell-off as markets tilt toward accumulation, especially among long-term investors.
The removal of the sell-wall may signal a major rally for Bitcoin and crypto.
3. The Bitcoin (BTC) Network is Safer Than Ever
The Bitcoin SHA-256 network’s record-breaking adoption is the last reason to be enthusiastic about crypto markets this week.
SHA-256 hash rate, which gauges Bitcoin network computing power, is at an all-time high.
First, there has never been so much computer power dedicated toward Bitcoin, meaning network adoption is at an all-time high. The second consequence of making the network more secure is that a 51% assault on the BTC network is less possible.
The difficulty rate, which represents the difficulty of mining a successful hash, varies every two weeks to match the number of computers trying to mine BTC. It has never been tougher to mine a Bitcoin.
A high difficulty rate will start to induce the market supply shock needed for the next bull run as more miners retain fewer coins.
Market bottoms can be revealed via mining. Looking at Bitcoin’s hash ribbons, which indicate miner capitulation (likely BTC market bottoms), recent Bitcoin price action in the New Year has moved BTC away from a major miner capitulation zone following FTX.
This may indicate that the worst of the 2022 Bear Market is gone and prices will rise in the months preceding 2024.
With a bull market resurgence likely, investors are trying to locate the finest altcoins for the 2023 crypto market.
The Failure of a Silicon Valley Bank Sparks a Shame Game in the High-Tech Sector
Original Source: Silicon Valley Bank Collapse Sets Off Blame Game in Tech Industry
Executives and investors blamed each other when the Silicon Valley bank collapsed.
Friday at Silicon Valley Bank in San Francisco. Bitcoin supporters blamed centralized banking.
For once, the issue did not involve a bitcoin firm.
Tech panicked Friday when Silicon Valley Bank collapsed. After a year of near-constant turmoil, crypto CEOs and investors used the opportunity to lecture.
Crypto proponents blamed central banking. Their alternative financial system without major banks and gatekeepers was better. They claimed that government authorities’ crypto crackdown caused the bank’s collapse.
“Fiat is fragile,” wrote Bitcoin proponent Erik Voorhees.
“We’re witnessing machine glitches,” said Aptos Labs CEO Mo Shaikh. “Take a pause and contemplate the practicalities of decentralization.”
A big crypto business reported late Friday that it has billions of dollars stranded at Silicon Valley Bank, changing the tone. A stablecoin meant to maintain $1 dropped in price, causing market tremors.
Finger-pointing went both ways. Tech investors said that the crypto world’s parade of unscrupulous actors and overnight crashes had conditioned consumers to fear at the first hint of problems, laying the atmosphere for Silicon Valley Bank’s disaster. During a crypto bank run, Sam Bankman-FTX Fried’s crypto exchange fell bankrupt in November.
“That’s the pattern recognition too many have,” said Human Ventures investor Joe Marchese.
The blame game is a symptom of IT sector factionalism, where hot start-ups and trends come and go and crises may push agendas. Crypto proponents blamed traditional banking for Silicon Valley Bank’s collapse. Venture capitalists blamed social media hysteria for the bank run. Others criticized the government’s economic policies or the bank’s administration and communication.
After a rough year for IT businesses, including a months-long crypto crisis and significant layoffs at Silicon Valley’s biggest corporations, the discussion is underway.
Traumatized people. Frax founder Sam Kazemian claimed they’re financially shellshocked. “When you see anything that smells like smoke, you wonder if it’s on fire. You act like everything is burning and go while you can.”
Silicon Valley Bank started wobbling on Wednesday when it reported it had lost over $2 billion and would liquidate assets to fulfill withdrawal demand. Startups panicked and withdrew their funds.
Bank runs typically self-fulfill. Silicon Valley Bank, the greatest bank failure since the 2008 financial crisis, was taken over by the FDIC on Friday. IT businesses with banked funds hurried to pay staff and vendors.
Silicon Valley Bank was in “good financial condition prior to March 9,” according to a California Department of Financial Protection and Innovation decision. The ruling claimed investors and depositors ran on its holdings, making it bankrupt.
Silicon Valley Bank has a tiny crypto presence. Due to legal uncertainties, several big banks have avoided crypto firms.
Dragonfly venture capitalist Haseeb Qureshi remarked, “A lot of crypto start-ups had a really hard time onboarding onto Silicon Valley Bank.” “Our exposure is far lower than expected.”
One major exception. According to its financial records, stablecoin issuer Circle retains part of its cash reserves at Silicon Valley Bank.
Circle disclosed late Friday that $3.3 billion of its $40 billion reserves remained in Silicon Valley Bank after a day of frenzied speculation over its exposure. “Wires established on Thursday to reduce balances were not yet processed,” Circle tweeted.
Stablecoins should stay at $1, unlike fluctuating cryptocurrencies. On Friday and Saturday, Circle’s stablecoin, USDC, fell below $1, increasing concerns of another crypto market crisis. Because to market volatility, Coinbase stopped USDC-to-USD conversions Friday night.
Crypto proponents used the Silicon Valley Bank failure to forward their arguments from the 2008 banking crisis. They believed that turbulence demonstrated banking systems were excessively centralized, inspiring Bitcoin.
“Mission:DeFi” anchor Brad Nickel observed, “Centralized institutions are more opaque.” “If cryptocurrencies powered our financial railways, a lot of things may not happen or would be a lot less severe.”
The Silicon Valley rush also resembled last year’s crypto sector crisis, which ended with FTX’s collapse.
Crypto critics said that a crypto-centric Silicon Valley Bank disaster would have been terrible for everyone.
Mr. Marchese warned the money may disappear if this was an uncontrolled crypto bank. “The system is working,” he remarked, because the F.D.I.C. handled the problem methodically.
The F.D.I.C. will repay bank depositors up to $250,000 while recovering the missing monies. “There’s no crypto regulator insuring accounts for $250,000,” said Moses Ventures investor Danny Moses, who predicted the 2008 catastrophe in “The Big Short.”
Some observers said Silicon Valley Bank aggravated the problem by declaring its financial losses just after Silvergate Capital, a crypto-friendly bank, began shutting down its operations this week. They said Silicon Valley Bank’s communication contributed to the run’s fear.
Adam Sterling, Berkeley Law assistant dean, said SVB’s rollout was badly timed. “Everyone was fidgety following Silvergate’s collapse.”
Summary of today’s bitcoin and cryptocurrency news
In simple terms, some investors are already eyeing 2023 presales because of the renewed optimism brought on by recent market rebounds.
Meanwhile, other analysts said Silicon Valley Bank worsened the crisis by announcing its financial losses shortly after Silvergate Capital, a crypto-friendly bank, began winding down its operations this week. They said Silicon Valley Bank’s communication contributed to the run’s panic.