In recent days, financial markets have been consumed by fear as concerns of a banking contagion grow following the closure of Silvergate Bank’s SEN payment network and the implosion of Silicon Valley Bank. This has been the largest banking collapse since 2008, with US bank stocks experiencing significant damage, and the S&P500 going negative year to date. Surprisingly, Bitcoin has seen an encouraging bounce back above $20,000, which is being described as a ‘Cyprus moment.’ There are three reasons for the surge in Bitcoin’s price despite the banking chaos. Firstly, Circle has reassured USDC holders by putting SVB fears to bed through the Federal Deposit Insurance Corporation. Secondly, looking on chain, Bitcoin has faced 25 days of net inflow onto exchanges; however, the sell-off appears to be over, and accumulation positioning is expected. Finally, the Bitcoin SHA-256 network has never been bigger, making it more secure than ever and less susceptible to a feared 51% attack against the network. This brings positivity to the market as the next Bitcoin halving event approaches in 2023.
