At around 7:30 a.m. ET, the price of bitcoin skyrocketed past the $27,000 range to a high of $27,025 per unit. Precious metals, or PMs, like gold and silver, also rose between 1.98% and 2.12% against the U.S. dollar over the past day. While many market observers are wondering why specific assets like PMs and cryptocurrencies have rebounded, a number of speculators suspect it’s because the U.S. central bank will now relax its monetary tightening policy.
4 Major Banks Bailed Out Following Silvergate Bank’s Collapse; Federal Reserve’s Easing Sparks Rebound in Cryptocurrencies and PMs
Last week, market investors witnessed four significant bailouts to save depositors stemming from Silicon Valley Bank (SVB), Signature Bank (SBNY), Credit Suisse, and First Republic Bank. All four financial institutions were bailed out with billions of dollars after a financial contagion spread across the U.S. banking system following the fall of Silvergate Bank. The bailouts, combined with speculation that the Federal Reserve will stop raising the federal funds rate and may even cut it, have fueled the values of precious metals and the cryptocurrency economy. The price of bitcoin (BTC) rose to $27,025 on Friday morning and the asset is currently changing hands for $26,517 per coin.
BTC is up 6.9%, and the second-leading cryptocurrency asset, ethereum (ETH), has risen 5% higher over the last day. A troy ounce of .999 fine gold is $1,959 per unit on Friday, up 1.98%, and an ounce of fine silver has increased by 2.12%, hitting $22.13 per unit. Market investors believe that the Fed is ‘back to printing money’ again, according to Phoenix Capital Research analyst Graham Summers. The analyst noted that the U.S. central bank has erased half of its quantitative tightening (QT) so far. Summers mentioned that what the Fed did in just five days was equivalent to more than two months of quantitative easing (QE) during the Covid-19 pandemic. Summers stated:
Now, technically much of this ($164 billion to be exact) came in the form of loans to banks. The banks will have to pay this back, so it’s not quite the same as Quantitative Easing (QE). Regardless, the key point is that the Fed is no longer shrinking its balance sheet … instead it is printing money. And not a little bit, but $300+ billion in a single week.
Intotheblock.com‘s (ITB) Onchain Insights newsletter this week notes that monetary easing policy may be contributing to the recent spike in risk assets….
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