The financial collapse caused by the collapse of American banks, Silicon Valley Bank, Signature Bank and Silvergate Bank, and in parallel; the collapse of the Credit Suisse Group, which generated a new day of tension dragging the entire financial sector and directly to the European markets, it turned the cryptocurrency narrative upside down, causing a surge in the crypto asset markets.
The US banking crisis sparked the debate about the responsibility of the Financial Regulator (FED) in the global banking system, about how much control financial regulators “the use of investor funds by banks” and how beneficial or not state interference in the economy is.
In this context, as previously mentioned in Cointelegraph, the cryptocurrency sector acted “as a safe haven” during the current banking crisis. The prices of Bitcoin (BTC) and Ether (ETH), the top digital currencies by market valuation, hit new multi-month highs amid the banking crisis in recent days.
So, the intervention of the US Federal Government caused a rebound in the cryptocurrency markets.
Joaquin Robles, Sales Manager at X-Trade Brokers DM SA (XTB), in communication with Cointelegraph en Español, considers that after the fall of SVB, investors are wondering if this event is an isolated situation or is it “Just the beginning of something bigger.”. In his opinion, the American bank was “exposed to vulnerable sectors”.
“The truth is that this bank had a very particular situation, since it was highly exposed to sectors vulnerable to rate increases such as technology and medical, and it had a large part of those deposits invested in assets that had lost value. The withdrawals of funds forced him to sell at a loss, which infected the rest of the clients to request their funds until it caused a liquidity crisis”, highlighted the XTB analyst.
For Robles, the US regulators acted quickly, because they were aware of the “contagion effect” that can cause this type of crisis if they are not contained at the moment, he also considers that in a sector where the foundations of his business are trust, this “type of situations” give way to doubts and suspicion, and therefore volatility in the markets.
“Although the market was restored after the intervention last Tuesday, there are still doubts as to whether there are other entities vulnerable to suffering the same situation. Now they have more liquidity tools, which could stop another eventual fall”.
Finally, he explained that, “Central banks are carrying out one of the fastest and most forceful rate hike cycles to combat inflation. Until now the effects have been limited, but little by little they are beginning to be noticed. Finally, the fall of SVB has once again highlighted the need for tougher regulation, precisely to avoid continuous government interventions ”, concluded Joaquin Robles from XTB.
The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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