The crypto market continued to rise on Friday despite tense stock market sentiment. Bitcoin, the largest cryptocurrency by market value, rose to $27,025 on the Bitstamp trading platform, and the average price is currently around $26,500. This is the highest level since June 2022. The price has increased by around a quarter since the beginning of the week. Other crypto assets such as ether also gained at the end of a tumultuous week. The market value of all almost 23,000 cryptocurrencies was around $1.14 trillion.
The banks crash, Bitcoin rises
Last week, bitcoin had temporarily slipped below $20,000. Among other things, the collapse of the US bank Silvergate may have initially weighed on the crypto markets because this bank was a central service provider for numerous large US crypto companies such as Coinbase. This was followed by the insolvency of Silicon Valley Bank, which was particularly important as a financier of the US startup ecosystem. Although the US government declared last weekend that it would pay in full for the deposits at the Silicon Valley Bank, the bankruptcy sent shockwaves through the banking industry worldwide. For example, the major bank Credit Suisse had to be supported by the Swiss central bank with a credit line of CHF 50 billion, and in the USA there was recently a $30 billion bailout for the First Republic Bank.
Some observers assume that this bank quake in particular will make cryptocurrencies, which are outside of the traditional financial system, new attractive. Bitcoin and Co. may also have recently received support from the significantly lower capital market interest rates, which also fell on Friday. “The prospect of a more cautious monetary policy by the central banks on both sides of the Atlantic acts as a tip of the scales,” said analyst Timo Emden of the dpa.
Due to the problems in the banking sector, the interest rate expectations of the central banks have also fallen significantly, which has pushed down market interest rates. In the USA, there has even been speculation that the US Federal Reserve could start cutting interest rates later in the year. This also contributed to the general decline in yields. Lower interest rates usually benefit risky asset classes like cryptocurrencies because safer assets like government bonds then pay less interest.
(sigh)
