In recent news, data by CryptoQuant revealed a correlation between the collapse of Silicon Valley Bank (SVB) and the price action of Bitcoin.
On March 8, SVB announced a $1.8 billion loss on its bond portfolio, which caused panic among investors and a subsequent sell-off. The bank’s holding company, SVB Financial Group, experienced a crash in its stock price, and many customers began to withdraw their money, with a total of $42 billion attempted withdrawals.
The day after SVB’s announcement, Bitcoin price started trending downwards as traders began assessing the impact of the bank run and financial fallout. Bitcoin’s price drop continued until March 12 when a joint statement by the Treasury, Federal Reserve, and FDIC was released, providing a bailout to depositors and a program to protect other depository institutions. This statement injected more liquidity into the financial system, resulting in a positive impact on Bitcoin’s price.
On March 12, Bitcoin went on a tear from approximately $20k to over $26k in the next few days. Bitcoin eventually recorded a 9-month high of over $28k. The chart below shows the correlation between Bitcoin’s price action and the events at SVB.
This news highlights the interconnectedness of the traditional financial system and the crypto market. It also shows that Bitcoin’s price is affected by external factors beyond its control, such as the performance of traditional financial institutions. As Bitcoin continues to gain mainstream acceptance and become more intertwined with traditional finance, investors must be aware of potential external events that could affect the cryptocurrency’s price.
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This article was republished from azcoinnews.com
