Imagine waking up one day and finding out that your bank account has been frozen by the government. That’s what happened to millions of customers of Silicon Valley Bank, the largest bank to fail since the 2008 financial crisis.
Hi everyone, In this blog, I’m going to explain what happened to Silicon Valley Bank, why it collapsed so suddenly, and what are the implications for the economy.
Brief Background
Silicon Valley Bank, or SVB for short, was founded in 1983 as a lender to tech startups and venture capitalists. It grew rapidly over the years, becoming one of the most influential banks in Silicon Valley and beyond. It had more than $175 billion in assets and served some of the biggest names in tech like Airbnb, Stripe, Coinbase, and Tesla.
The Crisis
But on Friday, March 10th 2023, everything changed. The bank said that it was failed to meet its obligations and requested assistance from the Federal Deposit Insurance Corporation (FDIC), which is a government agency that insures bank deposits up to $250,000 per account. The FDIC seized control of SVB and appointed a receiver to manage its operations.
What caused this sudden collapse?
Well, according to some reports, SVB was involved in risky lending practices, fraud and mismanagement. It allegedly lent money to unqualified borrowers who defaulted on their loans or used them for illegal purposes. It also failed to comply with anti-money laundering regulations and other banking laws. Some insiders even claim that SVB’s CEO Greg Becker was aware of these issues but ignored them or covered them up.
Impact of the crisis
The fallout from this crisis is huge. Not only did SVB’s stock price plummet by more than 90%, but also millions of customers were left stranded without access to their money or their online banking services. Many tech startups that relied on SVB for funding or payroll were also affected by this disruption. Some even had to lay off employees or shut down operations.
The FDIC has assured customers that their deposits are safe and that they will be able to access them soon through another bank that will take over SVB’s accounts. However, this process may take some time and cause some inconvenience for customers who need their money urgently.
The SVB collapse has had a significant impact on the crypto markets, as SVB was one of the major banks that supported crypto-related businesses and transactions. According to some reports, some of the effects of the SVB closure on the crypto markets are:
- Coinbase and Binance, two of the largest crypto exchanges, have suspended conversions of USDC, a stablecoin backed by US dollars that is issued by Circle, a crypto group that had $3.3 billion exposure to SVB.
- More than $70 billion were wiped off the crypto market in 24 hours as bitcoin dropped below $20,000 for the first time since December 20202. Other cryptocurrencies like Ethereum, Dogecoin and Cardano also suffered losses.
- Crypto wallets withdrew $902 million USDC from centralized exchanges in the past 24 hours amid fears of liquidity crunch and regulatory crackdown. USDC reserves are held in cash at Reserve Banks, which include SVB and Silvergate Bank, another crypto-focused bank that announced its liquidation on Wednesday.
Let’s look at what the Indian Index and Bitcoin price movements are trying to tell us.
First, understand what BTCUSDT chart is telling us
The current market analysis indicates that the movement of BTCUSDT is in a sideways channel, presenting a compelling opportunity for investors. The coin has already established a solid support level and has the potential to break out of its current consolidation phase. A sustained close above its immediate resistance of USD 25600-25700, which also coincides with its 200 SMA on a weekly time frame, could trigger the next major resistance at USD 32000.
Moreover, the strength indicator is on the rise, and the volume in the current rally is at an all-time high, suggesting strong market momentum. These favorable technical indicators, combined with the fundamental factors, create a highly convincing case for investing in Bitcoin.
The recent crisis at Silicon Valley Bank, the largest bank to fail since the 2008 financial crisis, has shaken the confidence of investors in traditional banking systems. Bitcoin, as a decentralized and independent currency, was created precisely in response to the shortcomings of these traditional financial institutions. In light of this, the current banking crisis only serves to reinforce the value and importance of Bitcoin as an alternative banking method.
Therefore, as a forward-thinking investor, you should consider taking advantage of this opportunity and invest in Bitcoin. With its technical strength and strong fundamentals, Bitcoin is poised to make significant gains in the near future, and investing in it now could lead to significant returns in the long run.
BitCoin in Tradingview- Multiple time frame Analysis – Click Here
Now, lets take a look at Nifty
The Indian equity market has been struggling to find direction lately, with the benchmark Nifty index oscillating in a narrow range between 18500 and 15000. Despite occasional rebounds from the upper end of the consolidation, the index has been steadily losing ground in a classic bearish pattern of lower highs and lows, indicating a short-term bearish bias.
Adding to this bearish trend, the Nifty index has already posted a close below its crucial 200SMA, which is considered a key level by technical analysts. This development has reinforced the negative outlook for the index, suggesting further downside in the near term.
Despite the recent crisis at Silicon Valley Bank, the largest bank to fail since the 2008 financial crisis, there has been no discernible impact on the Indian equity markets. This is because the Nifty index was already in a downtrend prior to the crisis, and the crisis has not caused any significant shockwaves in the Indian market so far.
However, it is important to keep an eye on the unfolding situation at SVB and its potential impact on global financial markets. Any major developments in this regard could have a ripple effect on the Indian equity market, which is closely linked to global trends and sentiments.
Pandit Speaks.
The full extent of the SVB impact on the crypto markets is still unclear and may depend on how quickly and smoothly the FDIC can transfer SVB’s accounts to another bank. Some analysts expect more volatility and uncertainty in the coming days as customers try to withdraw their funds or switch to other banks or platforms.
News Credit
SVB closure spurs a crypto crisis: Coinbase and Binance suspend USDC conversions | Invezz
Crypto group Circle admits $3.3bn exposure to failed Silicon Valley Bank | Financial Times (ft.com)
More than $70 billion wiped off crypto market in 24 hours as bitcoin drops below $20,000 (msn.com)
Silicon Valley Bank collapses after failing to raise capital | CNN Business
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