Bitcoin, Other Cryptocurrencies Soar Amid Turmoil In Traditional Banking

Bitcoin on Monday (20 March) remained close to its highest levels in nine months as more investors turn to digital assets due to the recent turbulence in traditional banking.

Last week, the leading cryptocurrency by market value saw a 26 per cent increase, marking its best week in four years.

However, during Asia hours, it dropped modestly to $28,331 after reaching its highest price since 12 June last year at $28,474 on Sunday.

Bitcoin's momentum is driven by liquidity as it serves as an alternative liquidity vehicle, news agency Reuters quoted Markus Thielson, the head of research and strategy at digital asset financial services firm Matrixport in Singapore, as saying.

Analysts have predicted that Bitcoin could reach $45,000 by the end of this year due to central banks' liquidity flowing into crypto assets, just as it did in 2021 when Bitcoin reached record highs.

Ether, the second-largest cryptocurrency, also rose to a seven-month high of $1,846.50 on Sunday and is currently trending around $1,793.

The US Federal Reserve announced on Sunday that it and other major central banks would deepen liquidity by increasing the frequency of dollar supply operations in financial markets.

Over the weekend, the collapse of Silicon Valley Bank and the takeover of Credit Suisse by UBS at a discount added to the turmoil in the banking sector.

Switzerland's largest bank, UBS agreed on Sunday (19 March) to acquire its beleaguered rival Credit Suisse for $3.24 billion after an intervention by Swiss authorities in a bid to arrest financial panic that has swept the globe in the last week.

Under the terms of the merger agreement, all shareholders of Credit Suisse will receive 1 share in UBS for 22.48 shares in Credit Suisse. The exchange ratio reflects a merger consideration of 3 billion Swiss franc (~$3.24 billion) for all shares in Credit Suisse.

The move comes after the Swiss Federal Department of Finance, the Swiss National Bank, and the Swiss Financial Market Supervisory Authority FINMA on 19 March asked both companies to conclude the transaction to restore confidence in the stability of the Swiss economy and banking system.

The deal caps a highly volatile week for Credit Suisse, most notably on Wednesday when its shares plunged to a record low after its largest investor, the Saudi National Bank, said it wouldn't invest any more money into the bank to avoid tripping regulations that would kick in if its stake rose about 10 per cent.

The continuous decline in shares of Credit Suisse raised the worries over the Swiss lenders' collapse, following which the Swiss government had to intervene with a $54 billion lifeline and now the merger.