Cryptocurrencies have gained significant attention in recent years, and their value has been on the rise since their inception. Ethereum (ETH) and Bitcoin (BTC) are two of the most popular cryptocurrencies. In this post, we will discuss the surge in Ethereum price and its implications on the banking system.
Ethereum’s Price Surge and Banking System Implications
As of March 21, the price of Ethereum has increased from $1,760 to $1,820, while Bitcoin remains steady after a surge in the last few days. Ether’s value against Bitcoin had decreased since March 12, when the traditional finance (TradFi) scene started facing a crisis. However, no specific event triggered the sudden surge in ETH.
The Ethereum token supply has decreased by almost 67,000 ETHs, equivalent to $122 million, for the first time since its launch in 2015. ETH went into deflation on Jan. 16, 2023, and its total supply has steadily declined by 1,000 to 2,000 per day. More than 2,100 ETH are getting burnt daily, but around 2,000 are issued to purchasers, making the supply deficit around 100 ETH.
So far, Bitcoin has been the primary crypto asset for market speculators and investors running out of banking. Bitcoin’s high position might be because it is the most acknowledged crypto asset integrated into the general financial system. The surge in ETH might suggest a calmness in the banking system, but no solid evidence exists.
However, with the ongoing government intervention, the banking crisis might end, and there is hope for improved market sentiment. Significant banks on the verge of collapsing have made incredible recoveries while the federal government and FDIC intervened for the ones that have been crushed completely.
As industry proponents speculated a possible crash, the First Republic Bank stock dived by 50% on Monday. However, with $212 billion in total assets as of December 2022, the bank bounced back today, with the price increasing by an average of 30%.
Treasury Secretary Janet Yellen said the government might offer catchers to all banks speculating about a potential system contagion. Intervention by big banks such as the ECB, J.P. Morgan, and the Bank of England might save the banking scene and suggest that the crisis is ending. The falling behind of the bank collapse scene might make the Bitcoin price rise to slow down too.
In conclusion, the recent surge in the price of Ethereum and the possible calming of the banking crisis is an interesting development in the world of cryptocurrencies. While it is too early to tell what this means for the future, it is clear that cryptocurrencies and the banking system are intertwined, and changes in one can have significant effects on the other. As always, it is important to keep a close eye on developments in this space to make informed decisions.
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