Bitcoin Reaches All-Time High of $22k as Biden Government Tries to Stem Financial System Contagion

Published:

The Value of Bitcoin BTC (Bitcoin) is hitting a new high as the Biden Administration scrambles to prevent the downfall of Silicon Valley Bank from leading to a domino effect of regional banks throughout the U.S.

The U.S. Treasury Department is in the midst of a series of emergency meetings to determine if it should guarantee all depositors at SVB will be protected upon the bank’s sudden collapse, according to the Washington Post.

The Outlet cited people with knowledge of the situation and spoke of the internal deliberations occurring at The Treasury Department, Federal Reserve FDIC.

“Federal authorities are seriously contemplating safeguarding all uninsured deposits at Silicon Valley Bank, considering an extraordinary step to prevent what they fear would be a panic in the U.S. financial system.”

A mass realization that all American Bank accounts, including corporate accounts, are not insured by the FDIC up to $250,000 coincided with a sharp drop in the price of Bitcoin.

Bitcoin has skyrocketed from a 24-hour low of $20,334 to a peak of $22,111 – an 8.7% increase.

The anonymous creator of Bitcoin – Satoshi Nakamoto – created the first cryptocurrency as a substitute for modern banking.

Bitcoin was created in 2008 during the financial crisis. American Banks and financial institutions fell apart at the cost of everyday citizens.

In forming the world’s first cryptocurrency, Nakamoto wanted to create a scarce monetary system, backed by valid and verifiable ways of processing and confirming transactions without the need for a bank.

Bitcoin’s inventor described his, her or their invention as an antidote to the modern financial system.

“The essential problem with traditional currency is all the trust that’s required to make it work. It is critical that the central bank does not debase the currency. Nevertheless, there have been a number of breaches of trust in the history of fiat currencies. Banks cannot be depended upon to keep our money secure and electronically transfer it. But they lend it out in credit bubbles with only a small fraction of reserve. We have to trust them to protect our privacy and prevent identity thieves from draining our accounts. Their huge overhead costs make micropayments unfeasible…

With e-currency based on cryptographic proof, without the need for trust in a third party middleman, money can be secure and transactions simple.” 

The crypto industry is now grappling with its own issues in the banking system following the collapse of the crypto friendly bank, Silvergate.

Banks have attributed regulatory pressures and “recent industry developments” to its closure.

Silvergate’s shutdown set off last week’s downturn in the crypto markets, and the downfall of Silicon Valley Bank created direct consequences.

The stablecoin USDC was created by a firm called Circle. It revealed that it had $3 billion of its $40B in reserves held with Silicon Valley Bank. This Disclosure led to a plunge in USDC’s price, which dropped to $0.84 at one point and currently trades at $0.95 as of this writing. The Firm says it will use internal capital and its own resources to make up the difference.

The CEO of the world’s largest crypto exchange by volume, Changpeng Zhao, suggests any stablecoin that is connected to the banking system may encounter similar problems in the future.

Bitcoin is currently trading at $21,884 at the time of writing, an increase of 7.6% over the past 24 hours.

Stay Informed – Receive crypto email notifications right to your Inbox

Monitor Price Actions

Follow We are on Twitter, Facebook Telegram

Scan The Daily Hodl Mix

Check Latest News Headlines

&nbsp

Disclaimer: Opinions Expressed at The Daily Hodl They are not investment advice. Investors should carry out their own research before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be aware that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not endorse the purchase or sale of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Featured Image: Shutterstock/Liu zishan/CHIARI VFX

Related articles

Recent articles