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    Bitcoin Surpasses the $28,000 Mark Thanks to Banking Crisis

    Turmoil in the banking sector has Bitcoin reaching levels not seen in about nine months.

    According to analyst data of CryptoQuant, the BTC Reserves Indicator spiked as the coin crossed the $28,000 mark, setting a new nine-month high. It looks like traders are trying to take profits during the recent bull run.

    Not stopping there, Bitcoin also ended the last trading week with a gain of 27.17% – the highest weekly increase since February 2018.

    The BTC.D index (ratio between Bitcoin’s market cap and the market cap of the entire cryptocurrency market) also rose above the 46% mark, its highest since mid-2022, suggesting that the current uptrend comes entirely from Bitcoin’s internal strength, while other altcoins have yet to catch up.

    BTC’s impressive upward movement comes from the recent crises in the US and world financial markets. In mid-March, three banks in the United States, Silvergate Bank, Silicon Valley Bank, and Signature Bank collapsed quickly, all of which had crypto companies customers. Silicon Valley Bank alone is the second-largest bank collapse in US history with $209 billion in assets.

    Faced with the dire situation, the Biden administration asked the Treasury Department and the Federal Reserve (Fed) to intervene, ensuring depositors at Silicon Valley Bank and Signature Bank could both withdraw all of their assets. In return, the Fed had to pump up to $300 billion into the US financial markets last week. This amount is half the amount that the Federal Reserve recovered during the quantitative tightening and interest rate hikes of 2022, fueling rumors that the dollar will soon return to inflation.

    Some reports say that as many as 186 banks in the US are at risk of collapse similar to Silicon Valley Bank.

    And yet, last week, there was also news that Credit Suisse, the 167-year-old bank and the second-largest lender in Switzerland, is in deep trouble. The bank said it would borrow up to 50 billion Swiss francs ($53.7 billion) from the Swiss National Bank, taking advantage of a lifeline last Wednesday after its stock crashed as much as 30%. It also said it would buy back some of its own debt.

    By the end of 2021, Credit Suisse has assets of more than $829 billion – 4 times higher than Silicon Valley Bank.

    After a while of struggling to find a solution, the Swiss government convinced the country’s largest bank, UBS, to buy Credit Suisse for $3.23 billion, and even changed the law so that UBS could conduct the deal without a shareholder meeting.

    At dawn on March 20, the Fed and many major central banks worldwide such as the ECB, the United Kingdom, Switzerland, Canada, Japan, etc. said they had reached an agreement to increase USD liquidity in the market. From March 20, it will start processing USD transaction requests on a daily basis, instead of a week like before. The group of central banks affirmed that this is a necessary change to stabilize the current liquidity shortage situation.

    However, according to experts, this is another measure of pumping USD into the market amidst the banking crisis showing signs of spreading to Europe, fueling Bitcoin’s rise.

     BTC/USDT 4-hour price chart (Source: Binance)

    At dawn on March 23, the Fed will announce the latest interest rate adjustment. With the current financial turmoil, the question is whether the Fed will continue to maintain its policy of raising interest rates to reduce inflation or accept to stop to solve the current banking turmoils. Bitcoin price is expected to fluctuate strongly after the Fed’s decision.

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