- Bitcoin bounced almost $3,000 over the weekend as the U.S. banking industry suffered two blows
- Silicon Valley Bank and Signature Bank have collapsed and been shut down respectively
- Attention is turning back to Bitcoin as a banking alternative
Bitcoin bounced almost $3,000 over the weekend as the U.S. banking industry endured turmoil over issues surrounding Silicon Valley Bank and Signature Bank. Having dropped to $19,550 over concerns regarding the security of Circle’s USDC coin, the weekend seemed to embolden Bitcoin buyers as failures of the two banks reminded people of Bitcoin’s benefits as an asset separate from the traditional banking system. Having hit $22,600 overnight, the narrative around Bitcoin has suddenly swung bullish again following months of regulatory concerns.
Circle Concerns Led to Crypto Drop
Silicon Valley Bank’s issues emerged over the weekend, with a bank run proving to be the final straw for the entity that had been haemorrhaging money since 2022. The impact on the crypto space was felt most keenly when it was revealed that USDC maker Circle had $3.3 billion exposure to the bank. This led to a collapse of the USDC price and a general downturn in the crypto space on Friday night, but late on Sunday Circle boss Jeremy Allaire revealed that all asserts were secured, leading to a jump in the price of the crypto space:
100% of USDC reserves are also safe and secure, and we will complete our transfer for remaining SVB cash to BNY Mellon.
As previously shared, liquidity operations for USDC will resume at banking open tomorrow morning.
— Jeremy Allaire (@jerallaire) March 12, 2023
Yesterday things got worse for the U.S. banking system however when Signature Bank, which was founded in 2001, was closed by regulators due to a “similar systemic risk” to Silicon Valley Bank. These dual concerns were enough to push the U.S. Dollar Index down and Bitcoin up, with its fundamental nature as an alternative to banks playing a part in the narrative.
Bitcoin Bounced into Resistance
While it’s always nice to see a Bitcoin bounce, we must be wary of where it is right now:
As we can see, the weekend’s move took Bitcoin right up to the same weekly resistance level that it struggled with last week before its collapse to $19,550. It has already wicked above this line and rejected, which means a pullback to the mid to low $21,000s is likely before any further upwards momentum can be expected.
With Circle now whole and Binance promising to put nearly a billion dollars from its Binance Recovery Fund into BTC, ETH and BNB, there is every chance that this bear market rally could continue higher.