Bitcoin Tests Key Resistance on Banking Sector Concerns

Cryptocurrencies are trading significantly higher this week as the traditional banking sector goes through its biggest crisis in over a decade.

BITCOIN (BTC:US), the largest digital coin, initially fell amid the drama surrounding Silicon Valley Bank (SIVB:US), as traders were seeking shelter in safe-haven assets. However, the cryptocurrency reversed earlier losses and rose to its highest level in 9 months after U.S. authorities moved in to stem spreading concerns about the health of the banking system.

The U.S. Treasury, Federal Reserve, and Federal Deposit Insurance Corporation (FDIC) decided over the weekend to backstop all uninsured deposits of both Silicon Valley Bank and Signature Bank (SBNY:US), two banking firms that are seen as very important for some of the major crypto businesses. 

“We are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” it is said in the joint statement. 

Moreover, cryptocurrencies were boosted by expectations that the Fed will slow down the pace of monetary tightening as it deals with a major banking crisis. This is supportive for risk assets, which are very sensitive to the environment of higher rates.

Several Congress members, including Pat Toomey, Madison Cawthorn, Ted Cruz, and Marie Newman, invested in cryptocurrencies last year. The vast majority of these transactions were made while Bitcoin was trading between $15,000 and $50,000.

Most recently, Congressman Madison Cawthorn bought $15,000 - $50,000 worth of BTC on March 30, when the digital asset closed at $47,062.70.