Historical replay · BTC/USD
The SVB Collapse and Bitcoin Rally (March 2023)
Silicon Valley Bank's failure on March 10, 2023, followed by the stablecoin USDC's temporary de-peg, might have been expected to spook crypto markets. Instead, Bitcoin rallied sharply, in what became one of the most interesting contrarian reactions in its history.
On March 10, 2023, US authorities took control of Silicon Valley Bank (SVB), a major bank for the tech and startup sector, in the largest US bank failure since the 2008 financial crisis. The following day, Circle — the issuer of the USDC stablecoin — revealed it held roughly $3.3 billion in reserves at SVB, causing USDC to lose its $1 peg, dropping to a low around $0.87 over the weekend.
Under normal circumstances, a broad flight from risk assets, crypto included, might have been expected. Instead, the opposite happened: Bitcoin rose from around $20,000 to over $24,000 in the immediately following days, continuing to climb over the following weeks. Several factors contributed: the banking crisis pushed markets to price in faster Fed rate cuts, and for some investors, the fragility shown by the traditional banking system paradoxically strengthened the case for decentralized assets not tied to any single bank.
The episode became a frequently cited case study for the fact that Bitcoin doesn't always behave like a classic "risk asset" that falls alongside stocks during financial stress: under certain circumstances, especially when the problem is specifically about the banking system, it can move in the opposite direction from the more intuitive expectation.