In a week, two American banks failed, and the crypto market immediately rose

In a joint statement from the Federal Reserve, the Department of the Treasury, and the FDIC, it was announced that all those who had deposits in the now-closed Silicon Valley and Signature banks would be able to withdraw their funds on Monday.

Bitcoin is currently trading around 22.300 dollars, and Ethereum around 1.600 dollars, which is an increase of about 9 percent in the last 24 hours, according to CoinGecko data. The total market capitalization of cryptocurrencies has returned above 1 trillion dollars.

US dollar coin (USDC), the second-largest stablecoin in the crypto market, has regained most of its dollar parity and is currently trading around 99 cents. USDC fell to a new low of 87 cents on Friday evening after its issuer, Circle, announced that it still has 3,3 billion dollars in cash reserves backing USDC at Silicon Valley Bank.

The drop over the weekend shook confidence in USDC and other stablecoins like USDD and USDP, raising doubts about the sustainability of stablecoins in a broader sense. This panic will surely leave a deeper mark, and doubts will not be so easily quelled just because USDC has recovered.

The current banking chaos likely began barely more than a week ago when crypto-friendly Silvergate Bank showed signs of trouble. After numerous crypto companies that used Silvergate (including Coinbase, Galaxy, Gemini, and Crypto.com) stated they would stop using it, Silvergate announced it would cease operations.

Just two days later, on Friday, Nasdaq halted trading of Silicon Valley Bank, which had experienced a bank run worth 42 billion dollars the day before and requested an extraordinary acquisition. Within hours, regulators closed SVB, causing bank and technology stocks to take a dramatic hit due to fears that other regional banks would be in trouble. More crypto and tech startups publicly announced they held funds in SVB.

Then, on Sunday, financial regulators in New York abruptly closed Signature Bank, citing systemic risk.

HSBC officially announced on March 13 that its subsidiary, HSBC UK Bank, is acquiring Silicon Valley Bank UK for 1 British pound.

The issuer of the stablecoin Paxos stated that it currently holds 250 million dollars in Signature Bank. The company added that it has insurance for private deposits exceeding the balance Paxos currently has in Signature Bank.

Meanwhile, leading U.S. cryptocurrency exchange Coinbase stated that it had a corporate cash balance of about 240 million dollars at Signature Bank on Friday. The company also said it expects a full recovery of the funds.