Why Is Ethereum (ETH) Going Up Today?

Ethereum (ETH), the world’s second-largest cryptocurrency by market cap, has jumped more than 13% during a surge among the world’s major cryptocurrencies, after the U.S. government announced emergency measures to deal with the U.S. banking crisis. Three banks have failed at this point. On March 12, regulators took over Signature Bank as it was unable to meet its financial obligations. This came on the heels of startup lender Silicon Valley Bank making a similar announcement at the end of the previous week. Silverware Bank, a leading cryptocurrency lending operation, closed its key digital payment services on March 3 and announced liquidation March 8. During the week of March 6 to March 10, ETH plunged nearly 10%. However, as the U.S. government announced its intentions over that weekend to cover debts from Silicon Valley Bank and Signature Bank, consumer confidence sent Ethereum’s price soaring almost 10% in the next 24 hours alone.

Other cryptocurrencies saw dramatic increases in price following the announcement as well. Bitcoin (BTC), the world’s largest cryptocurrency, has seen a more than 28% gain. Bitcoin is currently trading at almost $27,000. Altcoins Cardano (ADA) and Binance Coin (BNB) are both up more than 10% as well.

Why Is Ethereum Going Up Today?

In an effort to stem the flow of losses brought on by the collapse of Silicon Valley Bank, the federal government launched an emergency rescue of the U.S. banking system on March 12.

There were initial reports that Treasury Secretary Janet Yellen was hesitant to cover Silicon Valley Bank’s losses. However, Signature Bank’s failure on Sunday pushed leading financial regulators to take drastic measures.

Yellen, along with Federal Reserve Board Chair Jerome Powell and Federal Deposit Insurance Corp. (FDIC) Chair Martin Gruenberg, said in a joint statement that every Silicon Valley Bank depositor would have access to all of their money by Monday morning.

“Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system,” the statement said. “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.”

Regulators emphasized that “no losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”

USDC Coin Regains Its Peg

Circle’s USDC Coin has regained its all-important dollar peg. The stablecoin lost its peg following the announcement from Silicon Valley Bank on Friday.

Investors feared that since Circle kept funds in the FDIC-backed bank, the stablecoin issuer would not have the reserves needed to properly match USDC’s obligations.

USDC fell to around $0.86 per coin, and crypto exchange Coinbase even halted trading to try and stem the flow of losses while still maintaining USDC’s $1.00 peg.

However, after the announcement that the FDIC would be backing all of Silicon Valley Bank’s obligations, USDC regained its peg on Monday.

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