Analysts say investors seek security in bitcoin and ethereum

The shutdown of Silvergate, SVB, and SBNY banks triggered temporary turmoil in the cryptocurrency market. However, the crisis only confirmed the significance of Satoshi Nakamoto’s decision to create the first digital currency. This opinion is shared by Glassnode.

“After an extremely productive week, the digital asset industry finds itself without three crypto-friendly banks in the US. Investors seem to be looking for safety in bitcoin and ethereum,” the analysts said.

Before the announcement of the US authorities about their readiness to help Silvergate, SVB and SBNY clients, the most popular cryptocurrencies reacted to the situation by depreciating. However, the market then recovered.

And Arthur Hayes, co-founder of BitMEX crypto exchange, recently wrote that the digital asset market could go into a bullish mode after the recent turmoil. He made such a statement just at a time of high volatility in the industry.

The expert believes that the crypto market will recover, considering the recent injection of $ 1 billion from the Binance fund, which is aimed at stabilizing the industry through the purchase of Ethereum, Binance Coin and Bitcoin. These investments can be the very support for the industry and help it recover from recent losses.

Hayes also pointed to the Fed’s collateral policy for lending to banks and other financial institutions. Bank collateral is a guarantee for the loans they receive, and the regulator’s margin requirements dictate how much financial institutions provide collateral for loans.

The collateral is valued at the face value of the asset and the margin requirement is 100% of the face value. This means that the value of the collateral provided by the bank must be equal to or greater than the loan amount. The introduction of the new policy is due to the recent collapse of SVB and Silvergate, which were closely associated with crypto companies such as Tether and Circle.