Bank of America is in Crisis, Bitcoin Price Soars?

Image source: www.forbes.com

The crisis that hit the United States banking sector last Sunday. This crisis started with one of the banks, namely Silicon Valley Bank (SVB), which made many people excited last Friday and Sunday.

The Silicon Valley Bank (SVB) crisis also affected many large banks in the United States such as Signature Bank, Silvergate Bank, and most recently First Republic Bank.

In fact, the banking crisis in the US impacted Europe. The second largest bank in Switzerland, namely the Credit Suisse bank, was also hit by a crisis that could lead to the downfall of this legendary bank. But actually, Credit Suisse has often been hit by crisis problems in recent years.

The banking crisis in the United States also made market players worried that this was the impact of high central bank interest rates.

Not only that, Silicon Valley Bank (SVB), which has become banks for startups in the US and even a bank for the crypto industry, has made digital assets invisible to many people in the world again.

The contagion also threatens to swallow up crypto. Signature Bank, the last major ally of crypto in the banking world, was impounded by regulators earlier this week after the Silicon Valley Bank fiasco.

Signature as a key role in the United States crypto ecosystem. If no banks step in to reproduce the service, the growth of United States crypto will weaken again significantly. Even though now, crypto is experiencing a recovery after experiencing a significant fall last year.

"The impact will be huge if no US bank accepts deposits from crypto clients," said Taylor Johnson, co-founder of PsyFi, which makes crypto-finance products.

"That would be very painful, and drastically reduce crypto activity for any person or business in the United States," Johnson added.

New York-based Signature Bank is not just a crypto bank, it also has a big impact in real estate lending and law firm services.

But during the bull run of the crypto pandemic era, Signature Bank became one of the main legacy institutions to embrace crypto, holding US$10 billion in crypto deposits as of January 2021.

Signature Bank also runs the Signet payment system, which allows crypto companies to instantly transfer money in and out of crypto at any time.

Signet plays a critical role in the operational efficiency of several major exchanges, including Coinbase. Since 2019, Signet and its main competitor, SEN Silvergate Bank, have been responsible for moving more than US$2 trillion in and out of crypto, according to data from Forbes.

But after the collapse of the world's second largest crypto exchange, FTX, Signature has been trying to distance itself from crypto, especially since the exchange platform has become one of its clients.

In December 2022, Signature Bank said it would offload US$8 billion worth of crypto to reduce its exposure to a volatile industry.

Signature's decision is worrying but not detrimental to crypto, as the industry can still rely on Silvergate Bank, a bank for other cryptos. However, Silvergate was hit hard during the crypto's downturn last year, and announced on March 9 that it would be ceasing operations.

Following Silvergate's death, JPMorgan predicts that some of its customers will migrate to Signature Bank. Meanwhile, venture capital investors and crypto executives told The Information they were exploring SVB as another alternative option.

Thank you for visiting and reading our latest news articles.