The value of major cryptocurrencies rose Monday in the wake of U.S. government plans to protect Silicon Valley Bank and Signature Bank depositors.
The Federal Reserve issued a pair of statements on Sunday with one clear message: Silicon Valley Bank’s depositors, both insured and uninsured, will receive help in a manner that will “fully protect” their deposits.
The risk of a banking contagion was lower at the start of the week than last Friday, but not zero.
Following a rally in the price of bitcoin and other crypto assets, the overall crypto market surpassed $1 trillion in value on Monday, up about 14% day over day.
In the past 24 hours, bitcoin rose 18.4% to over $24,000, while ether rose 15% to about $1,700, CoinMarketCap data showed. The two cryptocurrencies, which are the largest by market capitalization, are trading in parallel with one another.
USDC, the second largest stablecoin, also recovered about 4% in the past 24 hours following the news that deposits would be protected, CoinMarketCap data showed.
The alleged stablecoin depegged from its $1 peg for three days, going as low as 88 cents, after uncertainty circulated around the $40 billion USDC empire and the company shared that $3.3 billion, or about 8.2%, of its total supply of reserves were held in SVB.
Circle announced the reserve risk was “removed” since the funds became available on Monday morning.
“Trust, safety and 1:1 redeemability of all USDC in circulation is of paramount importance to Circle, even in the face of bank contagion affecting crypto markets,” Jeremy Allaire, co-founder and CEO of Circle, said in a statement. “We are heartened to see the U.S. government and financial regulators take crucial steps to mitigate risks extending from the banking system.”
USDC’s market capitalization is about $40.5 billion, with $10.9 billion in daily traded volume, down 1% in the past 24 hours, according to CoinMarketCap data. At the time of publication, USDC was millicents away from its $1 peg at $0.993, up 3.9% in the past 24 hours.
The crypto market, alongside other major industries, had a volatile week after Silvergate Capital, one of the largest banks to provide services to crypto companies, shared it was winding down operations and liquidating its banking division.
Shortly after, Silicon Valley Bank collapsed on Friday, and Signature Bank, a major crypto lender, was shut down by regulators on Sunday.
This market turmoil has seemingly propped up the crypto market, however, as traders responded positively to the news and the overall market cap rose on Monday.