Bitcoin Leads Crypto Recovery After SVB Crash Triggers Selloff

Cryptocurrencies bounced back on Monday after President Biden announced plans to limit the impact of the collapse of two regional banks and stablecoin issuer USD Coin said it could still be exchanged for dollars.

USD Coin, also known as USDC, rebounded to $0.998 from an all-time low of $0.87 hit on Saturday, well below the estimated 1:1 peg against the dollar.

The drop was fueled by concerns about the exposure of Circle, the U.S. firm that issues USDC, to a Silicon Valley bank that collapsed on Friday in the biggest bank failure since the 2008 financial crisis.

But on Monday, bitcoin surged almost 10% to $24,300.40 to bounce back from the low the token hit a day earlier.

According to CoinMarketCap, the overall crypto market earned over $105 billion in the 24 hours to 12 noon ET on Monday, bringing the market cap back to over $1 trillion.

Analysts warned that despite the US measures, market sentiment will remain tense.

“Markets remain turbulent due to the failure of the SVB,” said Alvin Tan, head of FX strategy at RBC Capital Markets in Singapore. “The situation is evolving, but it looks like volatility will remain elevated in the coming days.”

The crypto pivot came after U.S. officials took emergency action on Sunday to bolster confidence in the banking system after the collapse of the SVB threatened to spark a wider financial crisis.

In addition to SVB, New York’s top financial regulator has acquired Signature Bank, a key banking firm for crypto companies. These closures follow the bankruptcy last week of Silvergate Capital, a major lender to the cryptocurrency industry.

Cryptocurrency companies such as Coinbase and Galaxy Digital aggressively cut ties with Silvergate after the company announced it was liquidating its bank and going out of business on Wednesday.

Follow The Post’s coverage of the collapse of Silicon Valley Bank

Both Silvergate and SVB put their money into US Treasuries, which lost value as the Federal Reserve raised interest rates. These banks were forced to sell these bonds at a loss to strengthen their capital position.

In an effort to prevent the infection caused by the SVB disaster from spreading to the larger banking sector, regulators stepped in on Sunday and closed Signature Bank.

“With the actions we’ve taken over the past few days to protect Silicon Valley and branded bank depositors, Americans can be confident that our system is safe.” President Biden said on Mondayconfirming that the deposits will be there when they need them.

The turmoil in the market due to the collapse of the SVB has left investors wondering if the Fed will raise interest rates by 50 basis points more this month, according to CNBC.

The market is currently estimating a nearly 60% chance that the Fed will keep its current rate and about a 40% chance of raising it by 25 basis points. Prior to the SVB crash, there was a 70 percent chance of a 50 basis point upswing.

With mail wires