What’s going on at the Silicon Valley Bank?
The SVB bank, which mainly did business with start-ups, fell on Friday. In just 48 hours, a series of bad bonds and the release of billions in stocks led to panic. The fact that the bank was unable to raise money by issuing new shares was also bad news. Investors and major customers massively withdrew their money from the bank, which ultimately caused the bank to collapse. Before the weekend, SVB came under the supervision of the Federal Deposit Insurance Corporation (FDIC). He has frozen the assets. At the end of last year, the SVB managed more than $ 175 billion in assets.
Breathe a sigh of relief
After days of unrest and declining financial markets, good news came out today. The U.S. government has announced that it will pay out all assets of the Silicon Valley Bank (SVB) that collapsed. Customers will receive their money starting Monday, Janet Yellen, the Secretary of the Treasury, the US central bank (the Fed) and the US Deposit Insurance Fund (FDIC) said in a joint statement. The same procedure will also be applied to Signature Bank, which was closed by the US regulator last night. This means that companies and investors who had their money with the bank can breathe easy.
“Today, we are taking decisive action to protect the U.S. economy by strengthening public confidence in our banking system,” the statement read. “This move will ensure that the U.S. banking system continues to fulfill its vital role of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.”
Why is the Bitcoin price rising?
That investors and companies are being bailed out is of course good news, but that still doesn’t explain today’s huge crypto price increase. Certainly not because the stock markets are not showing such a large increase at all. Analysts therefore give another explanation for the large crypto price increase. They say that this new banking crisis shows that the current financial system has a major problem. Central banks around the world have to step in again and again to save banks. That is very bad for the economy and Bitcoin may be a solution for that.