Crypto Market Cap Reclaims $1 Trillion As BTC Rallies

March 19, 2023 11:18 am Comments

Based on recent data, it has been shown that the total market cap of the entire crypto industry has once again reclaimed the $1 trillion mark.

This is due to the impressive rally that has happened in the past week where most digital assets experienced an average gain of around 26% in the past seven days.

Some of it has definitely been caused by the recent banking crisis which has caused a lot of investors and depositors to seek alternative banking solutions.

As a result, crypto seems to have been specifically designed for scenarios such as these and data has shown that Bitcoin was among the biggest winners.

Since the start of the year, BTC is already up 50% since January 1st which beats the performance of most other asset classes.

CoinTelegraph reports:

The surge in cryptocurrency prices occurred as the United States Federal Reserve was forced to lend banks $300 billion in emergency funds. According to PBS NewsHour, nearly half of the money went to failed financial institutions Silicon Valley Bank and Signature Bank and was used to pay uninsured depositors.

The remaining $153 billion was obtained through a long-standing program known as the “discount window,” which allows banks to borrow funds for up to 90 days.

While appearing to protect the banking sector, additional funding for the Federal Deposit Insurance Corporation and credit facilitation using Fed resources ultimately creates a “false sense of confidence,” according to activist billionaire investor Bill Ackman.

The $30 billion plan devised by U.S. regulators to avoid a major liquidity crisis in First Republic Bank “raised more questions than it answers,” said Ackman, who manages the hedge fund Pershing Square. Furthermore, Ackman stated that “half measures don’t work when there is a crisis of confidence.”

It has been reported that the assets of billionaire Warren Buffet, a long time crypto critic, has also suffered a lot of losses due tot the recent banking crisis.

Buffet is reportedly in talks with the White House on the current situation as many of the bank stocks have suffered losses in the past week.

This is likely due to fear from investors that there may be additional bank runs in the future and many are seeking alternative investments outside of just holding cash in the banks.

The Fed is also in a difficult position right now as they have to juggle between not causing any more bank failures through interest rate hikes, but they also need to continue the hikes if they want to combat inflation.

As a result, it is unknown how the situation will unfold as the Fed has multiple problems that it needs to solve at the same time.

CNBC concludes:

“In the space of a few days we’d turned from a hawkish Powell to an environment where economists were predicting the Fed might not even hike rates in March, benefiting Bitcoin,” Trenchev said.

“It’s been said that the Fed will only stop hiking rates when they break something, and now that something is broken, attention has turned to Bitcoin.”

Bitcoin has rallied 50% this year. In contrast, the tech-heavy Nasdaq, which bitcoin has been closely correlated to in the past, is up 12% in the year to date. The S&P 500 is up 2.5%.

Gold, which is seen as an asset that investors flock to in times of market turmoil, is up just over 3% this year.

There aren’t many commodities or stock indexes that have beaten bitcoin. In terms of individual stocks, Meta
is up around 60% in the year to date.

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