Cryptocurrencies | Bitcoin resists bad news from the banking sector

(London) Bitcoin soared on Monday as most other assets plunged in the wake of the bankruptcy of US bank SVB, testifying to the resilience of cryptocurrencies despite the bad news that has been rolling in for the sector for months. .

The last three sessions could have seen prices melt, as was the case at the end of 2022 after the bankruptcy of one of the largest platforms in the sector, FTX.

This weekend, the USDC, a so-called stable cryptocurrency, because it is supposed to be pegged to the dollar, saw its course turbulent, because its issuer, Circle, announced that it had left 3.3 billion dollars in the coffers of the bankrupt bank. Silicon Valley Bank (SVB).

And on Sunday, Signature Bank, one of the favorite banks in the sector, also went out of business, a few days after Silvergate, another establishment popular with crypto enthusiasts.

These bankruptcies, caused by a wave of bank withdrawals, raise the question of the long term “partnerships between traditional banks and crypto companies”, notes Clara Medalie, analyst for the digital asset data provider Kaiko.

“Silvergate and Signature were very important to companies in the industry, and right now there is no credible alternative,” she told AFP.

However, while an icy wind is blowing on the world stock markets or raw materials, bitcoin has taken more than 20% since Friday evening.

The decentralized cryptocurrency, which was launched in 2008 by vocal opponents of the bailouts of major Wall Street banks by the Federal Reserve (Fed) and the US Treasury, owes some of its gains to the action of these two players, who guaranteed the deposits of failing banks.

“Bitcoin took off when the government said they would refund deposits, but there was another catalyst: Binance,” adds Medalie.

Changpeng Zhao or “CZ”, the boss of Binance, the first cryptocurrency exchange platform, announced overnight from Sunday to Monday on Twitter that he would use a relief fund he had set up after the bankruptcy from FTX.

Goal: invest one billion dollars in cryptoassets like bitcoin, ether or BNB, cryptocurrency issued by his group.

“The announcement itself was enough to push the market up,” Ms. Medalie comments.

CZ may have been prompted to act by the sharp correction that the cryptocurrency market has been experiencing since Thursday and the bankruptcy of Silvergate.

Despite the magnitude of the rise since this weekend, bitcoin does not reach records but simply returns to its levels of three weeks ago.

“Price over the past five sessions has been a roller coaster,” notes James Butterfill, head of research for investment group Coinshares, noting that the prospect of higher Fed rates had weighed on the sector so far. .

The surge in the price of bitcoin in 2020 and 2021 was partly due to the abundance of liquidity provided by central banks, which had opened the monetary tap wide during the COVID-19 pandemic and are now tightening it to fight inflation. .

“Now it’s clear that overly tight monetary policy is starting to do damage, and not just for cryptos, and expectations for rate hikes are limited,” adds Butterfill.

Despite the surge in the price of bitcoin and other major cryptocurrencies, the future is not necessarily rosy for the sector, whose recent setbacks have distanced part of the world from traditional finance.

“There are institutional buyers”, that is to say from professional funds, “but they remain a minority”, recognizes Mr. Butterfill, who evokes “productive discussions” with some of them “despite the reputation issue caused by FTX”.