It's been a wild week in crypto and Beyond in just a few days we saw the Collapse of three U.S banks silvergate Silicon Valley Bank and signature these Were some of the largest bank failures In the U.S history since the 2008 Financial crisis Each of these Banks had closed ties with The crypto industry nevertheless while Back stocks were tumbling Bitcoin Rallied so what's going on is this 2008 All over again in this video we'll Explain exactly what happened and what To expect next before we get started Don't forget to like the video and Subscribe to our Channel I'm Giovanni Your host and this is a coin Telegraph Report Foreign First let's talk about a Silicon Valley Bank so before collapsing svb was the 16th largest bank in the United States With about 209 billion dollars in assets Under management it was a major lender For U.S tech startups and crypto Companies svb's deposits inflow Skyrocketed during the covid-19 pandemic When the tax actor was booming on Wednesday March 8 svb revealed it was Facing liquidity issues and had to sell A bond portfolio at a 1.8 billion dollar Loss the announcements sparked Panic Among depositors who tried to withdraw 42 billion dollars worth of deposits on
Thursday March 10. thus the situation Sound familiar yes that is exactly the Sort of bank run that brought down Crypto friendly Banks silvergate just a Few days earlier if you missed it check Our dedicated video here on Friday svb Was on the brink of insolvency resulting In its shutdown by U.S Regulators this Led to severe consequences for crypto Vector stablecoin is sure Circle Revealed it had 3.3 billion dollars of Reserves at svb as a result usdc lost Its one to one pack to the US dollar During the weekend fortunately on Sunday Evening U.S Regulators stepped in and Guaranteed that svb depositors would be Made whole Following that news usdc regained its Back to the US dollar so why did the svb Collapse put it simply it was a mix of Poor risk management and unfavorable Market conditions svb was not investing Its customers money in crypto or other Risky assets instead it invested in long Duration U.S treasury bonds which are Supposed to be pretty safe the problem Is that the U.S federal reserve has Carried out the most aggressive interest Rate hike in decades to battle inflation And as we know when interest rates Increase the value of Treasury bonds Goes in the opposite direction that Meant svb's portfolio was registering Unrealized losses that would still be
Fine if it weren't for a sudden Bank Run That forced the bank to sell the bonds And realize that big loss which is Exactly what happened to svb apparently Many other banks in the US are Experiencing similar issues according to The Federal Deposit Insurance Corporation at the end of 2022 U.S banks Were sitting on 6 620 billion dollars in Our realized losses to put that in Perspective that's over a half of the Entire crypto market cap given the Higher risk of contagion the FED has set Up a 25 billion dollars fund to help Banks in case of liquidity issues that Hopefully should calm down depositors And prevent further backgrounds So how is crypto affected by all this Last Sunday U.S banking Regulators Announced they were shutting down the Crypto-friendly Signature Bank the Reason was protecting the economy from Systemic risk stemming from the SBB Collapse the fact that Regulators speak This specific bank while many others Very similar stress situations is Suspicious to say the least Signature Bank was the only remaining Crypto-friendly Bank in the US after Silvergates collapse according to Bloomberg sources signature was Experiencing a large number of Withdrawals requests on Friday but the Situation had stabilized by Sunday that
Makes it sudden shutdown even more Suspicious many in the industry believe It was a political decision an attempt To use crypto as a scapegoat to blame For the ongoing banking crisis that Would not be surprising considering The Regulators growing pressure on banks Serving the crypto industry in the United States in any case the two main Crypto-friendly banks in the US are now Down that means crypto companies may Have difficulty finding alternative Solutions to connect them with the Traditional Financial system still there Might be a silver lining in this whole Situation despite the bank crisis Bitcoin has been rallying for most of The week while Bank stocks were down That could be the sign people are waking Up to the reality that the traditional Banking system has severe flaws and Taking self-cosity of their money is a Valid alternative another explanation is That markets anticipate an imminent Change in the fed's monetary policies it Is clear that rapidly growing interest Rates have played a significant role in This banking crisis the FED probably Understood that and is unlikely to raise Interest rates further that may signal That the next crypto bull market could Be near as for the banking sector it Looks like this crisis is far from over And it is becoming Global earlier this
Week Credit Suisse the second largest Bank of Switzerland announced it will Borrow up to 53 billion dollars from the Country's Central Bank to face a Liquidity crisis will be monitoring Closely these events so stay tuned That's it for this week's video If you Enjoyed the content please don't forget To like And subscribe I'm Giovanni see You next time
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