BTC soars to 28k on Fed’s $300 bn injection into US banks

BTC is experiencing a surge in demand due to the banking crisis
BTC soars to 28k on Fed’s $300 bn injection into US banks
BTC price hits $28K over the weekend

Cryptocurrencies surged this week as fears about the global banking crisis grew. The losses of the previous three weeks were quickly recouped as the total market capitalization of cryptocurrencies increased 15% every week to $1.17 trillion.

The recent rally in cryptocurrency markets, particularly BTC, has prompted the Federal Reserve to inject $300 billion into the economy to deal with the banking crisis. It reversed months of increasing interest rates to curb spending and inflation. It is a type of quantitative easing (QE), in which the government lowers interest rates in order to encourage spending.

Bitcoin (BTC) led the cryptocurrency recovery, entering the weekend in the $28,000 range, representing a 35% weekly increase in value. BTC emerged amid the 2008 banking crisis and is currently experiencing a significant surge in demand due to a new banking crisis that erupted this year.

The last QE took place in 2008 to expand the US Fed’s balance sheet by trillions and stimulated asset prices, including that of cryptocurrencies.

Read more: Crypto users turned to DEXs after SVB crash

Looking at the week as a whole, it was observed that the flow of money into the cryptocurrency market continued as pressure on US banks increased. Following the failure of three banks in the United States, attempts to prevent the failure of the First Republic Bank saw the transfer of funds worth $30 billion to the bank’s account, revealing the scale of the crisis once more.

The recent balance sheet expansion stemmed mainly from banks borrowing short-term loans from the Federal Reserve to cope with the recent collapse of the three US crypto banks, including the ‘start-ups focused’ Silicon Valley Bank.

“QE is increasing the balance sheet for monetary purposes. This is about financial stability, and all expansion of the balance sheet is not QE,” Marc Chandler, chief market strategist at Bannockburn Global Forex, said.

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