Crypto climbs in the shadow of SVB collapse as bank deposits protected
Cryptocurrency prices have soared after the collapse of California-based Silicon Valley Bank (SVB).
On Tuesday, the global cryptocurrency market cap rose to $1.11tn (£913.3bn), up 13% in the last 24 hours, according to Coingecko.
Bitcoin (BTC-USD) rose nearly 10% to $24,300, a three-week high. Ethereum (ETH-USD) rose nearly 5% to $1,671.
Read more: Crypto live prices
Crypto-traders who bet against a sharp rise were caught out.
Over $100m worth of bitcoin shorts were liquidated on Monday — the highest amount since 14 January, when a sudden increase caused $500m in liquidation across several crypto futures.
There have been $219.45m worth of short position liquidations in the crypto market in the past 24 hours, according to data from Coinglass.
Read more: How Silicon Valley Bank skirted Washington's toughest banking rules
Trust in stablecoins has also been knocked, as no stablecoins including USDC (USDC-USD) and USDT (USDT-USD) managed to maintain dollar peg over the weekend.
Crypto-traders seem to be reacting by moving into bitcoin as a short-term option.
Meanwhile, despite assurances from US president Joe Biden that the US financial system is secure following the collapse of both Silicon Valley Bank and Signature bank, bank shares in the US, Asia and Europe have slumped.
In the US, bank stocks declined despite Biden saying: “Americans can have confidence that the banking system is safe.”
“Your deposits are safe … we will not stop at this, we will do whatever is needed,” he said in a statement from the White House.
On Tuesday, global share prices fell, with Japan's Topix Banks index (TPY=F) tumbling over 7%, marking its worst day in over three years.
In midday Asia trading, Mitsubishi UFJ Financial Group (MUFG), the largest Japanese lender in terms of assets, saw shares drop by 8.1%.
On Monday, Spain's Santander (SAN) and Commerzbank (CBK.DE) of Germany both experienced share price plunges of more than 10%.
Watch: Web3 sectors to watch in 2023 | The Crypto Mile
Download the Yahoo Finance app, available for Apple and Android.