Silicon Valley Bank Collapse
1️⃣ The second-biggest bank in California, SVB, was among the biggest lenders for technological start-ups. The bank put too much money into the US Treasuries before the start of the Fed rate hikes. The bank didn’t expect the rates to keep rising that much. Higher rates led to a bigger hole in the bank’s balance sheet. Later, it announced an additional share placement to cover some of its losses.
2️⃣ A slight panic began among investors willing to withdraw $42 billion in 48 hours. The bank couldn’t handle such volumes and went bankrupt
3️⃣ Some believe this is just the beginning of something terrible for the US financial system. The US Fed is under heavy pressure to stop rising rates and relieve the economy (for example, provide cheap loans). Otherwise, the domino effect may cause more bankruptcies.
4️⃣ If so, the USD may continue the downtrend, pushing gold way higher. Bitcoin is on the rise as well. Crypto enthusiasts believe that the reason for the growth is that Bitcoin has been.
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