US Federal Reserve Pumps $300 Billion In Economy Amid Banking Crisis, Bitcoin Shoots 8%
As all the drama around the banking crisis unfolded in the United States, the US central bank aka Federal Reserve has to finally intervene to stop the contagion from spreading. On Thursday, March 18, the US Fed released $300 billion to banks from its emergency facility to meet the short-term funding needs.
The news led to strong optimism in the US equity market followed by a strong rally in the cryptocurrency market. The broader cryptocurrency has jumped by more than 5% adding another $70 billion to investors’ wealth in the last 24 hours. This week so far, the broader cryptocurrency is up by more than 10% already adding nearly $175 billion.
The world’s largest cryptocurrency Bitcoin (BTC) is leading the gains with 7.5% gains and shooting past $26,750 levels with a market cap of $517 billion. This is the decisive breakout that BTC has given above $25,000 for the first time in several weeks. With this, Bitcoin has extended its weekly gains to more than 35%.
Along with Bitcoin, other altcoins too have joined the market rally. All of the top ten altcoins have gained anywhere between 5-10%. Bitcoin competitor Ethereum is up by 5.63% and is currently trading at $1752 level with a market cap of $214 billion.
Since the beginning of 2023, Ethereum has been closely following the Bitcoin trajectory. With this current move, Bitcoin’s weekly gains have extended to more than 25%. Other altcoins like Polygon (MATIC) and Solana (SOL) are also up by more than 25% over the last week.
Following yesterday’s Fed decision, crypto veterans jumped in sharing their opinion. Gemini exchange founder Cameron Winklevoss said: “The Fed just gave everyone $300 billion more reasons to buy bitcoin.”
All eyes are on the Fed meeting next week as analysts are closely observing whether the Fed pivots. The recent decision hints that the Fed might pause any further rate hikes or announce the minimum of 25 basis points hike. Some crypto proponents believe that any interest rate cuts could push money towards riskier assets leading to more institutional participation in crypto.
In fact, Bitcoin and the broader cryptocurrency market has shown greater resilience to the banking crisis. In fact, Bitcoin has outperformed the US equities this year. While the Nasdaq 100 has gained 15% year-to-date, the BTC price is up by more than 50% since the beginning of the year.
However, BitMEX co-founder Arthur Hayes believes that the banking crisis is far from done. “The banking system is so f-ed. They are sitting on $2.2 trillion of bond losses. Long Live #banktermfundingprogram the largest bank bailout in history!” He wrote.