#bitcoin #Fed #crypto2023 #BTC #banks
The recent closure of banks in the US had a significant impact on the price of bitcoin (BTC) for several weeks. However, following new economic measures announced by the Federal Reserve (FED) to address the ongoing banking crisis, bitcoin’s value has been on the rise for eight consecutive days, surpassing the $27,000 mark.
CoinMarketCap reports that the price of bitcoin has increased by 21% since Monday and 34% in the last seven days, reaching $27,770 on the morning of March 17. While a subsequent correction lowered that figure to around $27,400, it’s still a remarkable rebound for the cryptocurrency.
The primary reason for the surge in bitcoin’s value is linked to the measures the FED is taking to address the US banking crisis. Firstly, the FED injected $143 billion into the banking system after related portfolio companies associated with Signature Bank and Silicon Valley Bank filed for bankruptcy last week. The banks’ losses due to the crisis are estimated at $620 billion.
Additionally, the FED loaned another $152.85 billion to the financial system through a program called the “discount window.” In total, the amount being injected by the FED into the financial system exceeds $300 billion. The last time the institution made a similar move was in 2008 during the mortgage crisis, when it injected $111 billion to save the banks.
These measures are likely driving up banks’ interest rates, as they anticipate a possible withdrawal of deposits in the coming days if the crisis persists. Therefore, the FED is flooding the system with liquidity. Alongside these measures, the FED also raised interest rates by 0.5%, a move that seems to be contributing to the surge in bitcoin prices, as the currency is perceived as a store of value, particularly during times of financial turbulence.
In conclusion, the measures taken by the FED are having a positive impact on the cryptocurrency market, with bitcoin leading the charge. While the situation remains fluid, investors are cautiously optimistic that these measures will stabilize the US banking system and result in a sustained upward trend for bitcoin and other cryptocurrencies.
