Despite the failure of Signature Bank, one of the first banks in the world to invest in Bitcoin, the value of the world’s most popular cryptocurrency continues to rise. Here’s why.
What happened to Signature Bank and what is the link to the value of Bitcoin?
To begin with, Signature Bank is not your average banking institution. While it is not as big as JP Morgan, it has become known in Italy and around the world for reasons unrelated to the credit system.
In particular, Signature Bank has been one of the pioneers in investing in Bitcoin, which has been perceived as forward-looking or risky depending on one’s stance on cryptocurrencies.
Interestingly, despite the recent closure of several cryptocurrency-focused banks by US regulators due to systemic risks, Signature Bank remained open until a few days ago.
This demonstrates a unique balance that highlights the growing sense of uncertainty in the US banking system.
The closure of Signature Bank can be seen as a precautionary measure taken by the authorities to avoid future problems.
More information is likely to emerge in the coming days, but it is safe to assume that there could be repercussions, particularly for tech startups that were heavily involved in the bank.
However, the good news is that the FDIC has already confirmed that all customer deposits will be fully covered.
The memo issued by the authorities following the decision to close Signature Bank emphasizes that all necessary measures have been taken to protect the US economy and strengthen confidence in the banking system as a whole.
Despite these reassuring statements by regulators, questions still remain as to how Signature Bank found itself on the brink of bankruptcy and subject to closure.
Despite the declaration of bankruptcy, one might have expected the price of BTC to fall.
However, this is not the case.
Currently, Bitcoin not only remains stable but is even consolidating its position in the $25,000 range.
This suggests that the cryptocurrency market has matured significantly in recent months.
Of course, it is crucial to buy Bitcoin only from reliable platforms such as secure and transparent exchanges. However, early evidence suggests that the industry is holding steady.
The Bitcoin paradox is a symptom of the industry’s preservation
It is clear that Bitcoin, along with other cryptocurrencies with a larger market cap, is experiencing positive effects from the federal intervention to safeguard the cryptocurrency industry.
However, the momentum does not come solely from this intervention. There are also underlying expectations about the Federal Reserve’s next moves.
Many believe that the recent Silicon Valley Bank and Signature Bank cases are the direct result of the Federal Reserve’s prolonged and rapid rate hike.
Therefore, the prevailing expectation is that the US central bank may choose to slow the pace of its intervention to avoid further damage to the already fragile banking system.
The Federal Reserve faces a delicate balancing act. It must maintain economic growth while preventing inflation from spiraling out of control.
At the same time, it must also safeguard the stability of the financial system. This can be achieved through careful management of interest rates and other monetary policies.
Given the unpredictable nature of cryptocurrencies, the Federal Reserve must take a measured approach to its interventions to ensure that it does not disrupt the industry.
Recent federal intervention in the crypto industry has been generally well received and has helped improve market sentiment. It has also provided some reassurance to investors and traders that the industry is being closely monitored.
Overall, it is clear that the cryptocurrency market is becoming increasingly interconnected with the financial system at large, and therefore it is essential that regulators and central banks remain vigilant and proactive in managing the sector.
By taking a cautious and thoughtful approach, the Federal Reserve can continue to support economic growth while safeguarding the stability of the financial system.