Third American bank closed by authorities, long lines at other bank, Bitcoin surges 8%

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Last Updated on 6 November 2023 by CryptoTips.eu

The four main banks for crypto companies in the United States are the Signature bank, the Prime Trust bank, the Silvergate bank and the Silicon Valley Bank (aka SVB). A few hours ago the American authorities decided to also close the Signature bank, while a yes-no game is starting between crypto and banks in the US about who is to blame for this mess. Meanwhile, Bitcoin shot up by some 8% and trades for $22,000.

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Hold the line

The value of the largest digital currency, Bitcoin, briefly fell to around $19,900 on Friday. It was the first time since mid-January that the largest cryptocurrency was worth less than $20,000.

That drop was only temporary as Bitcoin traded well above $20,000 again this weekend. It shot up explosively by some 8% when the news of the Signature bank closure became known. We now have to wait and see what news we get from the US in the next few days to see where we go for the rest of the month.

Potential rate hikes from the Federal Reserve, coupled with tighter regulations for crypto companies and more problems at banks are the main reasons why crypto markets may rise or fall this week. We should also keep a close eye on the stablecoin USDC to see whether it can reclaim its peg with the dollar.

Who’s to blame?

Silvergate was the crypto bank par excellence and when it closed, crypto twitter could do nothing but remain silent. But when Silicon Valley bank also went bankrupt on Friday and the American media blamed the high interest rates that the Federal Reserve imposed on their banks, all hell broke loose. Crypto Twitter said it made sense that the Federal Reserve’s interest rate hike was putting banks in trouble, while classic bankers pointed out that it was mainly crypto-related banks that were now in trouble.

It will therefore be a very interesting week to see who will ultimately be proven right. If the problem spills over to other, more traditional banks, the Federal Reserve may be held accountable for the problem. The United Kingdom admitted on Sunday afternoon that many of their tech startups are facing liquidity crunches because of the problems at Silicon Valley Bank.

If the Prime Trust bank also gets into trouble soon, American crypto companies will have to look for new lines of credit. The question is whether they will find those.

Videos circulated this weekend of long lines at the First Republic bank in California.

The price of Bitcoin depends on the answer to all those questions for the next few days and weeks.

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
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