Crypto prices rebound despite Silicon Valley Bank collapse

The global crypto market cap rose to $1.06tn, up 8.4% in the past 24 hours, after slumping to under $900bn after Silicon Valley Bank was shut down by US regulators on Friday. Photo: Dado Ruvic/Reuters (Dado Ruvic / reuters)

Silicon Valley Bank's (SIVB) collapse on Friday prompted a weekend of turmoil throughout the cryptocurrency sector, as UK and EU investors panicked after bitcoin (BTC-USD) and ethereum (ETH-USD) fell, and USDC (USDC-USD) de-pegged from its dollar parity.

But Monday saw the crypto-market rebound to a level higher than before the crash.

Bitcoin and ether surged nearly 10% in the past 24 hours, retracing all weekend losses.

Bitcoin stood at $22,283, up 9.5% in the past 24 hours, and ethereum regained the $1,600 level, up 9.3% in 24 hours, as of the time of writing.

Read more: FTSE 100 slips at the open as HSBC buys Silicon Valley Bank UK arm for £1

The global cryptocurrency market cap rose to $1.06tn, up 8.4% in the past 24 hours, after slumping to under $900bn after Silicon Valley Bank was shut down by US regulators on Friday in the largest failure of a US bank since 2008.

The price appreciation came after USDC-issuer Circle said on Sunday that it would cover all shortfall in reserves after it was revealed that it had $3.3bn of its $40bn USDC reserves locked in SVB deposits.

The stablecoin dropped below its parity with the dollar to a low of $0.90 on Friday. It has since recovered to $0.98.

Recovery was also aided by US Federal regulators who said that Silicon Valley Bank depositors will have access to all funds after US markets open on Monday morning.

Read more: Crypto live prices

The cryptocurrency sector is associated with the tech start-up sector which the SVB serviced, as the bank specialised in lending to technology companies.

Garry Tan, president of start-up accelerator Y Combinator, said the collapse was "an extinction-level event for start-ups".

Almost all Chinese technology startups that received US dollar investments had first opened an account with Silicon Valley Bank, according to 36Kr.

Given the changes in stable coins and banks, #Binance will convert the remaining of the $1 billion Industry Recovery Initiative funds from BUSD to native crypto, including #BTC, #BNB and ETH. Some fund movements will occur on-chain. Transparency.

— CZ 🔶 Binance (@cz_binance) March 13, 2023

However, the cryptocurrency sector saw a rally in Asia on Monday morning, spurred on by Binance CEO Changpeng Zhao's pledge to shore up the sector with a liquidity injection of $1bn.

Zhao tweeted: "Given the changes in stable coins and banks, Binance will convert the remaining of the $1bn Industry Recovery Initiative funds from BUSD to native crypto, including bitcoin, BNB, and ethereum."

Speaking about the short term implications of the collapse of SVB on the crypto sector, Kevin De Patoul, co-founder of Keyrock said: “With the collapses of SVB, Silvergate and Signature banks, it becomes very hard to move USD around in crypto. This will have an impact on volumes and their potential shift from USD to other currencies, like EUR. Let’s not forget that Bitcoin was created after a bank crisis. The confidence in banks and intermediaries in general take another hit with SVB and crypto markets are rallying.”

Watch: Girls that Invest founder on why more women should embrace the stock market | The Crypto Mile

Download the Yahoo Finance app, available for Apple and Android.