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

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.

Good morning!

We wake up with a new system, which saves the uninsured depositors.

Another bank was closed by the government and we have the start of a new tool for QE in the markets.

The government saved the situation, but this should be a massive wakeup to buy #Bitcoin.

— Michaël van de Poppe (@CryptoMichNL) March 13, 2023

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.

Confused about the $SVB collapse? @SRuhle has you covered. pic.twitter.com/3K3LGf5EtM

— 11th Hour (@11thHour) March 11, 2023

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.

Hunt wouldn’t give guarantee firms with cash in Silicon Valley Bank will have 100% of their cash protected - said there’d be a plan soon - before markets open tmrw ? https://t.co/BwKXgJjUot

— Laura Kuenssberg (@bbclaurak) March 12, 2023

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.

First Republic Bank Brentwood in #LosAngeles #SVBCollapse #FirstRepublicBank #BidensAmerica pic.twitter.com/uDGNe8cTe3

— BeverlyGrove (@BeverlyGrove) March 11, 2023

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