Bank Bailouts Buoy Crypto Sphere, Bitcoin Tops $26k

Cryptocurrencies surged close to 5 percent in the past 24 hours as massive institutional and regulatory support to quell the banking crisis lifted sentiment. Close on the heels of the lifeline to Credit Suisse, banks in the U.S. joined in a solidarity move to inject $30 billion to First Republic Bank that was struggling for liquidity. The relief spurred a rally in stock markets worldwide, brushing aside the pain of the fresh 50-basis points rate hike by the ECB. Crypto sentiment too was upbeat, lifting Bitcoin above the $26k level.

The ECB on Thursday stuck to its previous stance and increased benchmark rates by 0.50 percent to 3.5 percent, the highest level since 2008. The ECB assured that it was monitoring current market tensions closely and stood ready to respond as necessary to preserve price stability and financial stability in the euro area. The ECB noted that euro area banking sector was resilient, with strong capital and liquidity positions and that the ECB’s policy toolkit was fully equipped to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy. The assurances exacerbated the positive sentiment surrounding the rescue of embattled European banking major Credit Suisse.

The rally also reflected increased hopes that the recent banking crisis would force the Fed to be more dovish in its monetary policy stance. The recent decline in the producer price inflation and the increase in the unemployment rate also supported the thinking. The CME FedWatch tool currently shows an 85-percent probability of a 25-basis points hike in the next Fed review. Before the banking crisis, markets had aligned to the possibility of a rate hike of 50 basis points.

The fading bank crisis also reflected in the Dollar Index retreating to 104.17, down 0.24 percent on an overnight basis.

Overall crypto market capitalization recouped the $1.13 trillion level, last seen in August 2022. Market capitalization was $1.08 trillion a day earlier.

Bitcoin gained 6.7 percent overnight, 33 percent in the past week and 60 percent in 2023. Its current price is $26,476.13, after touching a high of $26,517.69 earlier in the trade.

Ethereum too gained 4.3 percent overnight to trade at $1,733.38. It gained 24 percent in the past 7 days and 45 percent on a year-to-date basis. Meanwhile, close on the heels of Lido’s warnings, Coinbase has also warned of delays to the ETH unstaking process.

The brilliant rally over the past few days has helped Bitcoin rise to a market dominance of 45.3 percent. Ethereum meanwhile commands a crypto market share of 18.8 percent. Stablecoins have fallen to 11.8 percent of the crypto market whereas the residual altcoins command 24.1 percent of the overall crypto market.

44th ranked ImmutableX (IMX) gained 19 percent overnight whereas 41st ranked Stacks (STX) rallied 17 percent during the same period.

86th ranked Kava (KAVA) dropped 4.95 percent overnight to top the laggards list.

Meanwhile the Blockchain Association has on Thursday submitted Freedom of Information Act requests to the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency, requesting documents and communications involving the de-banking of crypto firms in the United States. The Blockchain Association which claims to be the collective voice of the cryptocurrency industry comprising members from the sector’s leading investors, companies, and projects, also said it was investigating allegations of de-banking – including account closures and refusal to open new accounts – and actions by regulators that may have improperly contributed to the failures of Signature, Silicon Valley Bank, and Silvergate.

A U.S. court approving Voyager Digital’s acquisition by Binance.US, FDIC denying reports that Signature Bank purchaser must divest crypto and reports of the ex-top team of FTX receiving massive funds from FTX related entities are some of the other developments that dominated crypto news coverage in the past few hours.

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