The U.S. government's decision to provide a safety net for Silicon Valley Bank SIVB depositors has led to a surge in the value of major cryptocurrencies like Bitcoin BTC/USD, Ether ETH/USD and Dogecoin DOGE/USD and the market capitalization breaking the $1 trillion ceiling.
This morning, Bitcoin broke the $23,500 ceiling and reached $24,000 at the time of writing.
Ether meanwhile, is trading at $1652, up 13%, while Binance Coin BNB/USD is up over 13%, Cardano ADA/USD is trading up 14% and Dogecoin is up over 10%
Market participants and industry experts opine that the surge in cryptocurrency prices reflects the growing correlation between the broader financial market and digital currencies.
Experts suggest that this correlation is expected, given the impact of hundreds of billions of dollars, where investors tend to rush towards safer havens, such as gold or cryptocurrencies, in such cases.
However, this event cannot be seen as a singular factor to derive the correlation between cryptocurrencies and the broader financial market, according to them.
Commenting on the correlation, Edul Patel, the co-founder, and CEO of Mudrex told Benzinga that investors tend to rush towards the safest haven in times of market troubles, such as gold.
Read: CZ Speculates On Government Plot To Take Down Banks; Circle Responds To SVB Fall
He further added that in the long run, reduced volatility can be expected as the asset class matures.
Robert Quartly-Janeiro, the Chief Strategy Officer at Bitrue, commented on the bailout being a lifeline for the technology and VC space and how a capital and lending crisis has been averted, which would have affected new technologies with utility struggling after the SVB issues.
He said that the global nature of cryptocurrency trading makes it both correlated and uncorrelated, depending on the level of investor reaction.
Marius Grigoras, the CEO of Bhero, welcomed the surge in the cryptocurrency market and highlighted that it presents a significant opportunity to offer a more diversified investment portfolio for both cryptocurrency and traditional investors.
He added that regulatory compliance will increase adoption and acceptance from traditional financial industries, leading to more liquidity, increased stability, and a broader range of investment opportunities for both retail and institutional investors.
Alex Faliushin, CEO of CoinLoan said that the U.S. government technically gave a signal that if it is required to save the economy, they will print more money or save institutions, and their clients, respectively, from sinking due to poor risk management.
"What it says is that the crypto market is part of the global market and reacts to any kind of positive news just like other assets. More money and liquidity means the markets will go up naturally. Even a slight hint of potential QE and the money will immediately enter the market," he said.
In the long run, the gap will likely narrow even more as many see Bitcoin BTC/USD and other decentralized assets as the opposite of fiat currencies that can be printed and distributed just like that, he further said.
Next: JPMorgan Predicts Impending Disaster For Crypto Market Following Silvergate Shutdown
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