Bitcoin and Ethereum have recovered all weekend losses, amid high market volatility on Monday.

Data from Binance showed Bitcoin increased slightly to $22,500 while ether reclaimed the $1,600 mark, in the early hours of London trading session on Monday, The action was taken after USD Coin (USDC)-issuing Circle announced on Sunday that it would make up any reserve deficit, and as Federal regulators announced that Silicon Valley Bank depositors will have access to all funds on Monday morning following the U.S. Open.

The backstory: On Friday after Silicon Valley Bank customers rushed to withdraw their money in large quantities, the flagship crypto fell below $20,000. This prompted the California Department of Financial Protection and Innovation to close the bank, which is a major player in the global technology industry. The failure of Silicon Valley Bank is the second largest in the Unites States history.

Following U.S Treasury Secretary Janet L. consultation with U.S. President Joe Biden, joint statement released by Yellen, Powell, and Gruenberg said the U.S government had approved actions that would allow the FDIC to carry out actions at SIVB in a way that fully protected all depositors.

The recovery and liquidations: Consequently, the crypto market recovery over the last 24 hours resulted in the liquidation of $216 million in shorts, or bets against price increases, surprising traders who had been anticipating a market-wide collapse.

Data from Coinglass, revealed approximately 89% of all liquidations on the previous day were conducted by short sellers.

What you should know: When an exchange forcibly terminates an investors’s leveraged position as a result of a partial or complete loss of the trader’s initial margin, this is referred to as liquidation. When a investor cannot meet the margin requirements for a leveraged position, it occurs (fails to have sufficient funds to keep the trade open).

  • Massive liquidations may indicate the local peak or bottom of a sharp price movement, allowing traders to adjust their positions as necessary.
  • Ether futures had the highest volume of liquidations overall ($78 million), followed by bitcoin futures ($68 million). A market spike may have resulted from such conduct as shorts giving up their positions.
  • Other significant tokens experienced considerably smaller losses, indicating that movement was spot-driven. Losses of $4 million were incurred by optimism and Solana, followed by Litecoin and Aptos futures with losses of $3 million apiece.
  • After a tense Thursday and Friday, cryptocurrency investors found solace over the weekend in the Federal Reserve’s decision to fully restore all deposits at the bankrupt Silicon Valley Bank (SIVB) and the announcement by fintech Circle that it would cover any of its USDC reserves.