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The prices of cryptocurrencies jumped over 40 percent after the closure of Silicon Valley Bank (SVB) two weeks ago before sliding over 5 percent after The Fed announced it would increase its interest rate by 25 basis points.

On March 25, Bitcoin prices fell almost 4 percent in 24 hours but still gained 0.64 percent for a week, Coinmarketcap data showed. Previously, cryptocurrencies plummeted 4.8 percent on Wednesday following the Fed’s decision to hike the interest rate to control the inflation rate.

In contrast, the Bitcoin price rose 8.27 percent to $ 22,300 in 24 hours on March 13, three days after the closure of SVB and Signature Bank.

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While the Ethereum price at that time jumped 8.05 percent, standing at $ 1,599. Prices of other coins such as Cardano (ADA), Polygon (MATIC), Dogecoin (DOGE), Solana (SOL), Polkadot (DOT), Litecoin (LTC), Avalanche (AVAX), and Filecoin (FIL) also rose over 5 percent.

Research Director at Digital Asset Research (DAR), Marco Manoppo, said in a written statement that the crisis had pushed people to seek alternative methods to control their wealth.

“The Silicon Valley Bank collapse and the broader banking crisis have caused many market participants to speculate that the Fed would soon change its current monetary policy. Additionally, this crisis is creating distrust of centralized counterparties with large holdings, as evidenced by some behavior in the bond market. Fear causes people to seek alternative methods to own and control their capital. This banking crisis harkens back to the original ethos of Bitcoin: full ownership over one’s capital,” Manoppo said.

SVB closure was linked to the Fed’s aggressive benchmark rate, causing the rise in lending rate. At the same time, the SVB downfall triggered the collapse of Signature Bank as people rushed to withdraw more than $ 10 billion in deposits.

Crypto prices weakened after the rise in the Fed benchmark rate, a condition that cryptocurrencies tend to anticipate as the rise in interest rate may decrease the demand.

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However, given the volatility of the crypto industry, it is still possible that crypto prices will jump again.

“It’s likely that Bitcoin still has some room to go this week, but whether it will hit $1 million in 90 days, as Coinbase’s former CTO Balaji Srinivasan predicted on Twitter this weekend, is questionable. The drivers for a full-run crypto bull market don’t yet seem there, but this can be unpredictable. As ever, anyone investing in Bitcoin would be wise to think long term,” CEO of digital wealth platform Yield App Tim Frost said in an email interview on March 22.

Multiple factors, ranging from speculative to fundamental ones, can affect the cryptocurrency sector. Therefore, the relationship between the crisis and the crypto price hike is not straightforward.

“It’s critical to pay attention to crypto-fiat development on/off-ramps. With Signature Bank’s downfall, the crypto markets lost an integral component that contributed significantly to the industry’s market dynamics: SigNet by Signature Bank,” Manoppo wrapped up the interview.

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