With growing confidence that the digital asset industry can withstand recent upheaval in the US financial system, Bitcoin has surged above $26,000 for the first time since June. The primary cryptocurrency has risen for four consecutive days, spiking by 9.4% to $26,510. Since the failure of Silicon Valley Bank on March 10, Bitcoin has soared by roughly 30%. According to data from Coinglass, a derivatives trading data platform, approximately $230 million in short cryptocurrency positions were liquidated within the past 24 hours. A senior financial markets analyst at City Index, Fiona Cincotta, commented that "while dark clouds sit over Silicon Valley, Bitcoin is booming" and that "cryptocurrency is extending its impressive rally, as traditional banks struggle to maintain the trust of customers."
After a volatile week marked by the failure of three cryptocurrency-friendly banks in the US, the market for virtual and digital tokens stabilized as regulators took measures to bolster the nation's banking industry and protect depositors. These actions also aided in the return of USDC, the world's second-largest stablecoin, to its intended $1 peg, which had faltered due to Silicon Valley Bank's closure.
Many investors viewed the government bailout of Silicon Valley Bank's depositors as positive news, contributing to Bitcoin's surge beyond its 200-day moving average of $19,740, according to Hayden Hughes, co-founder of social-trading platform Alpha Impact. Hughes stated that sustained moves above the 200-DMA are typically early indicators of a bull market, adding that "if we stay at 25k, the next stops would be 28 and 30k."
Despite the failure of cryptocurrency-friendly banks, the swift rebound of Bitcoin has been remarkable. The cryptocurrency surged by over 12% on Monday, building upon gains from Saturday and Sunday. Vetle Lunde, the senior analyst at K33 Research, noted that Bitcoin's performance over the past three days is its strongest since October 2019.
On Tuesday, supporters of cryptocurrencies also highlighted the rise in US consumer prices in February as a factor contributing to the support of token prices. For years, many in the market have asserted that Bitcoin is a safeguard against inflation. However, this has not been consistently reflected in data and pricing over the past year. Notably, the coin has fallen 33% over the last year, even more significant when considering its decline from its 2021 peak of approximately $69,000.
Brian Nick, the chief investment strategist at Nuveen, attributed the surge in cryptocurrency prices to the "Sunday announcement effect." He explained that the guarantee of uninsured deposits has helped bolster the cryptocurrency market.