Major cryptocurrencies have regained stability after US authorities took emergency measures to mitigate the fallout from the collapse of Silicon Valley Bank (SVB) after some concerns were expressed about the correlation between the US currency's stablecoin dollar and the bank, Reuters reports today.
The US dollar currency, also known as USDC, rallied after hitting an all-time low on Saturday to trade at 87 cents, which is seen as undervalued for a currency pegged 1-for-1 to the US dollar. Bitcoin also rose 6% to $23,350, up more than 13% from yesterday's low. Analysts warned that the markets remain vulnerable to turmoil despite the US measures.
On Sunday, Jeremy Alier, CEO of Dollar Coin Issuance Department, issued a statement saying that the company's USDC deposits held at SVB Bank of about $3.3 billion, or about 8% of total deposits, will be fully available when banks open on Monday. He also said that the company's USDC operations will be open for business due to the company's new arrangement with Cross River Bank.
Digital miners such as Riot Blockchain and Marathon Digital are up more than 11%, while cryptocurrency exchange Coinbase Global is up 6.3%.
However, analysts warned that the markets remain vulnerable to volatility despite the US measures. “Markets remain volatile due to the collapse of Silicon Valley banks,” said Alvin Tan, head of currency strategy at RBC Capital Markets in Singapore. This instability is expected to continue in the next few days.
The impact of cryptocurrencies on the banking crisis in Silicon Valley illustrates the close relationship between these currencies and the traditional banking system, indicating that cryptocurrencies as a means of financial separation from traditional banks have not fully achieved their mission.
A Silicon Valley bank, a popular target for US tech startups, has made headlines over the past two days after it collapsed, leaving customers and investors stranded. The bank, which was suffering from unusual deposit withdrawals and a capital crisis, collapsed on Friday morning and was taken over by federal authorities.