Bitcoin (BTC) and Ethereum (ETH) managed to recapture the €22,000 level on Monday, suggesting some stability in the cryptocurrency market. After falling to its lowest level since January, Bitcoin broke above the €22,000 mark and saw its value rise by 10% on the day.
Ethereum followed a similar trajectory and is now trading above €1600. However, this positive development was mainly driven by news about government efforts to protect depositors at Silicon Valley Bank.
On the other hand, the improvement in market sentiment was also supported by the weakening of the US dollar. It should be remembered that the employment data for February showed a slowdown in wage growth, indicating an easing of inflationary pressures.
As a result, the Federal Reserve may closely monitor interest rate hikes and the demand for US dollars may decline.
Crypto Market Cap Rebounds as Bitcoin and Other Altcoins Rise
Over the weekend, the global cryptocurrency market rallied and hit $1,02 trillion after a sharp decline. The recent government announcement to protect the money of all Silicon Valley Bank depositors has been seen as a major factor positively influencing the entire crypto market. On Monday, Bitcoin, the world's oldest and most valuable cryptocurrency, held steady in the €22,000 range.
The recent rally in crypto market capitalization and the rise in value of Bitcoin and other altcoins demonstrates the resilience of the industry. However, the future of the market depends on regulatory clarity and stability. The lack of clear regulations and oversight has created uncertainties and risks that can hinder industry growth and adoption.
Therefore, the crypto industry must work with regulators to establish a framework that can ensure the security and stability of the market. This framework should address concerns such as investor protection, market manipulation, money laundering and cybersecurity. By implementing clear regulations and supervision, the sector can attract more investors and businesses, thus stimulating innovation and growth.
Silicon Valley Bank and Circle face significant challenges
It is also important to note that two major US financial institutions have run into significant roadblocks in the crypto industry. Silicon Valley Bank, which provides banking services to many cryptocurrency companies, recently experienced restrictions on withdrawals and transfers due to concerns about its liquidity position.
However, after the government announced it would protect all depositors, account holders were granted full access to their funds on Monday.
Meanwhile, Circle, a peer-to-peer payments technology company, is dealing with the failure of its main banking partner, Signature Bank, underscoring the stablecoin ecosystem's reliance on certain centralized entities.
These issues highlight the risks and weaknesses of the cryptocurrency industry and underscore the requirement for transparent laws and supervision to ensure market stability.
However, the absence of specific laws and regulations has made the sector vulnerable to fraud, money laundering and other illegal activities. Therefore, the crypto industry must engage with the authorities to establish a framework that guarantees the security and stability of the market.
A weaker US dollar triggers a bull run in Bitcoin
The general bullish bias towards the US dollar has also been identified as a key factor supporting the BTC price. The cryptocurrency market had a positive trend as the dollar fell significantly against a basket of currencies.
Traders predict that the Federal Reserve will only raise interest rates by 25 basis points, which will lower the value of the US dollar.
Investors are buying cryptocurrencies like Bitcoin (BTC) as a hedge against inflation, anticipating that the Federal Reserve might take a more dovish approach due to mounting economic challenges.
This trend of investors buying cryptocurrencies is likely to continue as they seek to protect their assets against the impact of inflation.
bitcoin price
Bitcoin broke through the €23,150 resistance level. If it had broken below this level, it could have triggered selling pressure and led to a further decline towards the €21,750 or €19,200 level.