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Due to the quickly developing banking crisis in the United States and efforts by the federal government to contain the consequences, the price of Bitcoin (BTC) has been on an upswing over the past week. The Federal Reserve has started an emergency lending program to calm the fear after three banks have already failed. Deeply involved in the cryptocurrency industry, Silvergate Bank shut down its platform for crypto payments on March 3 and declared liquidation last Wednesday. This Monday, the young lender Silicon Valley Bank disclosed that it would not be able to fulfill its obligations. On Sunday, federal officials shut down Signature Bank. In between all this Bitcoin rose 8% in a single day, as of writing the Bitcoin value is US $24,405.70.
Why Is Bitcoin So Popular?
Simply put, a lot of people who buy and use Bitcoin see it as a substitute for fiat money and a form of payment. Some people buy it as an inflation hedge, a store of value, or as an investment due to its scarcity and decentralized nature. Others seek a resource that is hard to seize and doesn't require a reliable third party to conduct transactions since they no longer have faith in their banking system or national currency.
After comforting guarantees from US authorities that assets at failing Silicon Valley and Signature banks would be safeguarded, several crypto-related enterprises and major cryptocurrencies rallied together as a result of this unexpected rise. The struggling USDC stablecoin also gained after the Federal Reserve and Treasury approved an increase in lenders' access to urgent funds following the government takeovers of Silicon Valley Bank and Signature. Although taxpayers who are also depositors indirectly finance the FDIC through fees on their bank deposits, the Joe Biden administration insists that no government money would be used. Investors anticipate that the Fed's rate increases will be significantly slowed down as a result of the failure of Silicon Valley, Silvergate, and Signature banks. No additional rate hikes are currently thought to be the most likely scenario, with fifty basis points of rate reduction by the end of the year factored in, according to sources.
Bitcoin Price Forecasts Can Be Quite Divergent
Bitcoin price projections range from $0 to over $1 million, with terms like "totally worthless" and "global reserve currency" being used. In the end, the price will not be influenced by advocates and opponents of Bitcoin. BTC's market price is governed by the rules of supply and demand, just like fiat exchange rates and the cost of other assets.
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Disclaimer: Analytics Insight does not provide financial advice or guidance. Also note that the cryptocurrencies mentioned/listed on the website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. You are responsible for conducting your own research (DYOR) before making any investments. Read more here.
