Bitcoin’s price soared past $26,000 on Tuesday for the first time since June last year, albeit briefly. This spike led to over $311 million in liquidations from the cryptocurrency market, hinting at a bear trap. Despite the short-lived surge, Bitcoin has gained more than 11% in the past week, trading around $24.8k during the Asian market session. The total cryptocurrency market capitalization has risen by 2% to approximately $1.14 trillion.
Ethereum, the second-largest digital asset by market capitalization, experienced similar volatility, with its price climbing from last weekend’s low of $1,400 to a high of $1,778 on Tuesday.
Ark Invest founder Cathie Wood attributed the recent price spikes in Bitcoin, Ethereum, and altcoins to instability in the banking system that threatened the stablecoin industry. Additionally, Binance converted its $1 billion Industry Recovery Initiative funds from the BUSD stablecoin to Bitcoin, Ethereum, and BNB.
Prominent crypto and stock analyst Lark Davis, with over 478k YouTube subscribers, also cited the ongoing banking crisis in the United States as a primary driver of Bitcoin’s surge. Recently, three US regional banks – Silicon Valley Bank, Silvergate Capital, and Signature Bank – shut down. The US federal government bailed out SVB and Signature Bank depositors with $25 billion.
According to Davis, the impending collapse of more regional banks could further fuel Bitcoin’s rise. As Bitcoin surged by as much as 20% recently, some banking stocks plummeted over 50% since the beginning of the week.
Interestingly, some banking stocks halted trading on Tuesday, coinciding with Bitcoin’s surge. This prompted Davis to criticize the SEC for not approving a Bitcoin ETF due to concerns over high volatility, despite the apparent instability in traditional banking stocks.