Bitcoin Prices Rise Amid The Banking Crisis‍

The European Central Bank, the Bank of Canada, the Bank of England, the Bank of Japan, and the Swiss National Bank are among the major central banks that have joined the United States Federal Reserve in a joint program to support U.S. dollar cash flow and ease pressure on the world's funding markets. This announcement was made on March 19.

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Swap lines, which are arrangements between two or more federal reserve to provide a key liquidity backstop and reduce pressure on the world's funding markets, will also continue to be active until at least the end of April, according to Fed Chair Jerome Powell.

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This might cause the Federal Reserve to hold off on raising interest rates, which has been linked to the current banking crisis.

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Several significant financial institutions, including Silvergate Bank, Silicon Valley Bank (SVB), Signature Bank, and Credit Suisse, have shut down since the beginning of March 2023.

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Notwithstanding these changes, Bitcoin BTCtickers down$26,834 has risen, reaching a peak of $28,500 on March 24. This is the currency's highest level since the crypto meltdown of June 2022. Despite a decline in March, when the leading cryptocurrency fell under $20,000, the 2023 rally for Bitcoin appears to have restarted.

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The value of Bitcoin has increased dramatically since January, when it was trading at roughly $16,500, by a whopping 72.73%. Investors have enjoyed 4,065 successful days out of the nearly 4,600 days that Bitcoin has been a marketable asset, refuting the myth that the crypto economy is unstable.

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Explaining the banking crisis

Financial markets have been rattled in recent weeks by a number of incidents that have shaken the world's banking sector. When Credit Suisse failed in Europe, competitor bank UBS had to step in and "rescue" them.

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Those who have been following Credit Suisse's financial and legal issues, which have been extensively reported for months, were not surprised by this outcome.

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Credit Suisse was promised support by the Swiss National Bank and Swiss Financial Market Supervisory Authority in the form of a 50 billion franc ($54.5 billion) emergency loan. Despite being less than half its recent market value, UBS agreed to buy Credit Suisse for $3.25 billion, which is significantly more than the $1 billion initial offer that Credit Suisse turned down.

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Over the Atlantic, the United States is dealing with its own banking crisis. Recent bank failures, notably those of SVB, Signature Bank, and Silvergate Bank, forced the Federal Reserve as well as the government to support depositors. All of the aforementioned banks saw significant bank runs. These incidents often take place when a bank loses the trust of its clients, which causes a spike in withdrawal requests.

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Politicians have assured the public that the banking system is secure while the Fed has employed the Bank Term Funding Program (BTFP) to insure deposits and inject additional liquidity into to the banking system in reaction to these events. Although while these steps have been taken to try and rebuild investor trust in the banking system and financial markets, some analysts caution that they might only be a temporary fix.

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The financial system in the United States is extremely fragile, with many banks having the potential to become technically insolvent during a bank run, according to a recent research. The authors of the paper indicate that more than 1,600 U.S. banks may shut down over night if the worst-case scenario of 100% uninsured deposits withdrew were to occur. Even more puzzling is the researchers' assertion that 106 banks would fail if only 30% of uAninsured deposits were withdrawn.

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