Crypto decouples from global financial markets amid banking sector gloom

Opposite to the sentiments in the global markets, prices of various crypto assets surged in the last two weeks. At $27,957 on Tuesday, Bitcoin was trading at its highest since June 2022. The total market cap of the crypto assets, at $1.16 trillion, was the highest since August 2022.

“Last week, crypto decoupled from the traditional financial world as crypto prices rallied despite the banking crisis. Many observers see this as a watershed moment in crypto’s evolution as an asset class,” said Parth Chaturvedi, crypto ecosystem lead at crypto exchange CoinSwitch.

In the last two weeks, several major global banks have collapsed. These include three in the US, namely Silvergate, Silicon Valley and Signature, and Credit Suisse in Switzerland. This has spread panic of contagion. Global markets, especially bank stocks, are seeing heavy sell-off. Central banks and regulators have rushed to ease the panic in the markets.

While on the other hand, Bitcoin climbed to its nine-month high of $28,500 on Monday.

“On Monday, Bitcoin briefly reached the $28,500 mark following the announcement that the US Federal Reserve had partnered with five other major central banks to ensure the steady circulation of the US dollar,” said Edul Patel, chief executive office (CEO) and co-founder of crypto firm Mudrex.

“This increase is attributed to a combination of factors, including instability in the banking sector, higher-than-expected inflation data, and renewed confidence in a dovish Federal Reserve (Fed), bringing Bitcoin to its highest level in nine months,” Patel added.