The Federal Reserve’s decision to provide liquidity following the failure of Silicon Valley Bank and Signature Bank has resulted in a bullish reaction from Bitcoin and the crypto markets.
BTC/USD has risen by 15% off its two-month lows, despite the failure of two major financial institutions under the Fed’s rising interest rates.
SVB suffered a massive loss due to investing consumer funds in mortgage-backed securities, which lost value during the Fed’s rate hikes.
The Fed’s Bank Term Funding Program (BTFP) effectively marks a return to quantitative easing (QE), as liquidity is injected back into the US economy, increasing investor appetite for risk. Although the sudden closure of Signature Bank has led to speculation that US authorities are trying to prevent the crypto markets from benefiting from the SVB aftermath, the joint statement confirmed that depositors of both banks will be made whole without any losses being borne by taxpayers.
There is now speculation over whether the Fed will reduce or leave the current interest rate unchanged, with some analysts predicting that there will not be a rate hike at the next FOMC meeting