On the previous day, investment giant ARK Invest reiterated its firm belief in the prospects of decentralized assets. As Katie Wood stated at the time, the cryptocurrency niche crisis in 2022 was accompanied by the collapse of centralised companies, which was caused by the sometimes dishonest actions of their management.

At the same time, Bitcoin, Etherium and other full-fledged coins were not affected. On top of that, ARK continues to add to its own stock of US cryptocurrency exchange Coinbase, and by huge amounts.

Why cryptocurrencies are rising

Wood posted a tweet in which she criticised the actions of the US Federal Reserve. According to her, the Fed could have prevented a banking crisis if it hadn’t been so radical in its strategy of raising the benchmark lending rate. Here’s her rejoinder, cited by Cointelegraph.

Cryptocurrencies did not lead SVB and Signature to bankruptcy. In my opinion, the main culprit was Fed policy. Due to problems with funding for VCs and higher returns on money market funds, deposits have left the US banking system.


It is worth noting that some politicians have indeed decided to blame the situation on cryptocurrencies. For example, Senator Elizabeth Warren, known for her hatred of digital assets, said that crypto had allegedly contributed to the collapse of the listed banks, while the management of financial institutions simply paid the price for their chosen strategy.

In fact, the collapse of the banking institutions was caused by management mistakes. For example, Silicon Valley Bank employees invested customer funds in long-term government bonds, which effectively locked up the money. However, as the key interest rate rose, the yields on these old bonds did not look attractive and their value declined markedly. In addition, the bank was forced to absorb the losses by selling the financial instrument, as it urgently needed cash due to an influx of people wishing to withdraw their deposits.


The CEO of Ark Invest pointed out the mismatch between the banks’ assets and liabilities. It has always been present in the system, but only recently has the size of this mismatch become too large.

Securities yields for banks were only 1-2% versus 3-5% for deposits, which led to significant capital outflows. Again, banks were forced to sell securities before maturity and admit losses, which depleted their balance sheets.

What is the role of the US Federal Reserve? The Federal Reserve has been aggressively raising its benchmark lending rate since early 2022. Because of this it becomes unprofitable to raise new capital for investments, which leads to falling markets, i.e. the depreciation of securities on banks’ balance sheets.

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According to Coindesk sources, Silicon Valley Bank’s problems have resulted in almost a tenth of Circle’s USD Coin Stablecoin (USDC) collateral capital being locked up. This has led to the loss of parity of the stablcoin with the USD and generally a good cause for panic. However, what happens in the end will be another factor for the growth of the crypto market in the long term – this is the consensus of most analysts.

Still, the major players in the crypto industry will continue to work on infrastructure development, disregarding the current risks. This was stated the day before by Ramani Ramachandran, co-founder and CEO of Router Protocol. Here is his rejoinder.

In the near term, bank closures could increase the increased regulatory scrutiny of crypto and bank ‘rails’ serving cryptocurrencies. The systemic risk from crypto to the entire economy will also come under closer scrutiny by regulators.

Ramachandran also insists that Tether’s USDT Stablecoin is at great risk of additional pressure from US regulators. After what happened with USDC, it has become clear that even large staplecoins with large reserves could temporarily lose their peg to the US dollar in a major crisis, which itself would have nothing to do with digital assets.

The reasons for the banking crisis were also mentioned in a recent interview by Jonathan Zeppettini, head of strategy development at Decred. Here is the relevant quote.

The situation with Silvergate, Silicon Valley Bank and Signature is a combination of several things: the banks failed to adequately hedge the risk of higher lending rates, classic capital outflows, and regulatory opportunism. The latter took the form of a desire to force the winding down of banks deemed to be “cryptocurrency friendly”.

Meanwhile, Bitcoin hodlers continue to store the cryptocurrency in their own wallets. The day before, analysts at Glassnode decided to compare the distribution of BTC between wallets of different sizes in February 2021 and January 2023. Above here are the balances of miners and exchanges, which have remained virtually unchanged over the two years. At the same time, there has been a significant increase in the overall balance of wallets with less than 50 BTC in their accounts. Their owners have absorbed the outflow of coins from the addresses of the so-called whales, as well as the exchanges and miners already mentioned.


There seem to be enough big players in the cryptocurrency industry who continue to believe in the great prospects for decentralised assets. Accordingly, they will continue to buy coins, thereby protecting digital assets from new local lows. And judging by the current behavior of the markets, interest is now also growing from ordinary investors, who are traditionally attracted by the increase in value of a particular asset.


While crypto continues to rise – the banking crisis has tentatively become the first real crisis in which digital assets have become a real safe haven for capital. What do you think about it? Share your opinion in our cryptochat.