The crypto market saw positive growth on Friday, despite the troubled condition of the stock market. Bitcoin, the leading cryptocurrency, reached $27,025 on the Bitstamp trading platform, with an average price of around $26,500. It is the highest level since June 2022, having increased by around 25% since the start of the week. Other cryptocurrencies also showed gains toward the end of a tumultuous week. The market value of all 23,000 cryptocurrencies was approximately $1.14 trillion.
Recently, Bitcoin had fallen below $20,000, resulting in a decline of the US bank Silvergate. This weighs heavily on the crypto market since the bank was a central service provider for various large US crypto companies such as Coinbase. Silicon Valley Bank’s insolvency soon followed, which was notably significant for financing the US startup ecosystem. While the US government has declared to pay for the deposits in full, the bankruptcy still shook the banking industry worldwide. Meanwhile, Credit Suisse had to be supported with a CHF 50 billion credit line by the Swiss central bank, and the First Republic Bank received a $30 billion bailout in the US.
The banking crisis has caused many observers to assume that cryptocurrencies are becoming more attractive since they provide an alternative to the traditional financial system. The recent decline in capital market interest rates has also supported cryptocurrencies. Market interest rates deflated on Friday, contributing to the decline in central banks’ interest rate expectations. There are even rumors that the US Federal Reserve will cut interest rates later in the year, further pushing down yields. The expectation of lower rates has provided an opportunity for risky and alternative asset classes like cryptocurrencies to benefit.
