The Disrupt

“Bitcoin (BTC), the world’s largest cryptocurrency by market capitalization, surged 18% to over $24,200 over the past 24 hours even as fallout from the implosion of Silicon Valley Bank widened. The surge has come amid the sort of short squeeze that historically sends prices higher. Data from Coinglass shows that traders liquidated $300 million worth of crypto positions on Monday.

The bitcoin rally comes as some investors are recognizing the fragility in the central banking system.

Bitcoin is leading the market because there is a cohort of investors that recognize the fragility of central banking. Crypto is responding to the anticipated change in liquidity conditions as it should.”

See Also: Could the Silicon Valley Bank Crisis End Crypto Winter?

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“The collapse of Silicon Valley Bank (SVB) is a blessing for bitcoin (BTC), crypto observers said, drawing parallels with the 2013 Crypus crisis that underscored flaws in the fractional reserve system and brought attention to decentralized, censorship-resistant BTC as a hedge against centralized banking.

Silicon Valley Bank, the 18th largest bank in the nation, collapsed yesterday – with it, we learn how last year’s record sell-off in U.S. Treasurys has created billions of dollars worth of unrealized losses within the banking sector and gain yet another example that in a system of fractional reserve banking, there are no depositors, only lenders.

Bank runs happen because fractional reserve banking requires lenders to maintain only a small portion of deposits available for withdrawal while the rest are lent out. The solution to the 2013 Cyprus banking crisis actually involved regulators raiding customer accounts.

Though measures taken to address the SVB crisis aren’t as draconian as the one taken for Cyprus, the entire episode underscores the point that customers’ funds aren’t as safe in regulated banks as we are made to believe. This point validated bitcoin’s appeal as a decentralized peer-to-peer network and seizure-resistant cryptocurrency facilitating self-custody of funds.

Bitcoin rallied sharply as the Cyprus banking crisis unfolded in March 2013. The cryptocurrency surged 178% to $93 that month and hit a record high of $265 in May 2013.

The [Federal Reserve’s] aggressive rate hikes and balance sheet reduction have caused a historic bank failure – fashioning a real-time ad for bitcoin self-custody. Ten years ago this week, there was a bank run in Cyprus, where ATMs were emptied and vaults were depleted. This event triggered the largest-ever rally (in percentage terms) in BTC.”

See Also: Bitcoin Was Built for This Moment

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“Crypto exchange Binance said it will convert $1 billion worth of Binance USD (BUSD) to bitcoin (BTC), ether (ETH), BNB coin (BNB) and other tokens to support the market. The transaction from Binance’s industry fund to BUSD took 5 seconds and cost merely $1.29.

The move likely contributed to buying pressure. Bitcoin jumped over $22,500 in Asian hours on Monday while ether regained the $1,600 market. BNB rose over 10% to trade over $300.”

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“Depositors of Silicon Valley Bank will have full access to their money beginning Monday morning, the Federal Deposit Insurance Corp. said, after confirming a successful transfer of deposits to a new bridge bank. The new bridge bank, called Silicon Valley Bank N.A., will be operated by the FDIC. It will have normal opening hours, and customers have been automatically switched.

All depositors of the institution will be made whole.”

See Also: HSBC Subsidiary to Acquire Silicon Valley Bank’s UK Unit for 1 British Pound
See Also: Silicon Valley Bank’s Parent Looking at Strategic Alternatives
See Also: Is This a Crypto Banking Bailout?

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“Circle has revealed that Cross River Bank — recognized for its services to fintech and crypto firms like Visa and Coinbase — is now its new commercial banking partner for producing and redeeming USD Coin (USDC).

In addition, Circle has “expanded relationships” with other banking partners to assist with USDC redemption, including Bank of New York Mellon (BNY Mellon), which already provides custody services for Circle’s reserves.

During the weekend, Circle issued a press release confirming 100% of USDC reserves are safe and secure. The company said it would complete the transfer of the remaining Silicon Valley Bank (SVB) cash to BNY Mellon, and liquidity operations for USDC will resume at banking open on Monday. At the time of publication, USDC has recovered and trades at $0.99.”

See Also: USDC Stablecoin Regains Dollar Peg After Silicon Valley Bank-Induced Chaos
See Also: USDC’s ‘Black Swan’ Depegging Could Have Been Avoided With Proper Regulatory Framework
See Also: Coinbase CEO ponders banking features after Silicon Valley Bank crisis
See Also: Burning USDC and Minting DAI Prove to Be Popular On-Chain Activities Amid SVB Collapse

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“Trading was temporarily halted for dozens of United States regional banks amid volatility and falling prices.

The Wall Street Journal reported early in the morning that trading was halted for First Republic Bank, which led bank losses when its price fell 65% by the time trading was stopped. Trading in PacWest Bancorp, down 25%; Zions Bancorp, down 25%; and Regions Financial, down 9%, was also halted.

Those banks saw uneven recovery when trading resumed, with Regions Financial and Zions Bancorp springing back, and the others rising slightly. The largest banks saw smaller losses. Citigroup was down 7.3% at the time of writing and JPMorgan Chase was off 1.3%. At the same time, the S&P 500, Dow and Nasdaq index were all up slightly.

U.S. President Joe Biden made a short statement on the economy just prior to markets opening March 13, in which he said: ‘America can have confidence that the banking system is safe. Your deposits will be there when you need them.'”

See Also: President Biden Calls for Stronger Bank Regulations in Wake of SVB, Signature Bank Collapses

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“Ex-congressman and the man behind the Dodd-Frank Act Barney Frank has said Signature Bank was shuttered in part to attack the digital asset industry. The former lawmaker, a Signature Bank board member, said in a Monday interview with CNBC that regulators targeted the bank to send an “anti-crypto message.”

New York regulators decided to abruptly shut down crypto-friendly Signature Bank on Sunday, citing system risk—which surprised management at the firm, according to a Bloomberg report. Regulators have not yet provided any further reasoning for shuttering the bank.

I think part of what happened was that regulators wanted to send a very strong anti-crypto message.”

See Also: Banking Crisis Won’t Kill Crypto-Banking Despite Short-Term Pain
See Also: ‘Nobody left to bank crypto companies’ — Crypto Twitter reacts
See Also: The Banking Crisis Is Not Crypto’s Fault

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“Stephane Kasriel, Meta’s head of commerce and financial services, wrote in a Twitter thread on Monday that the shutdown will allow the company “to focus on other ways to support creators, people, and businesses.”

Kasriel specified that Meta won’t give up on its mission to help creators connect with their fans, and will pivot focus on other products such as Reels for messaging and monetization. Meta will also continue to work with NFT and Web3 content creators who leverage its suite of tools to help them grow their community.

We learned a ton that we’ll be able to apply to products we’re continuing to build to support creators, people, and businesses on our apps, both today and in the metaverse.

While the feature gained some traction, it appears that Meta is shifting its strategy to explore other areas, including decentralized social media platforms.”

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“Eurler finance faced a flash loan attack on March 13, with the attacker managing to steal millions in Dai (DAI), USD Coin (USDC), staked Ether (StETH) and wrapped Bitcoin (WBTC). The exploiter carried out multiple transactions, stealing nearly $196 million. The ongoing attack has already become the largest hack of 2023.

A detailed analysis of the attack by blockchain security firm Slowmist indicates that the attacker used flash loans to deposit funds and then leveraged them twice to trigger liquidation.

There appears to be a bug in one of the Euler smart contracts, where it doesn’t check for the health factor when executing the donateToReservers() function. We are aware and our team is currently working with security professionals and law enforcement.”

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