Bitcoin soars amid banks bailout

·2-min read
Digital generated image of golden bitcoin sign inflated balloon against purple background.
Bitcoin soared on Monday as UBS announced it will buy Credit Suisse. Photo: Getty

Bitcoin soared on Monday to breach the $28,000 (£22,952) mark, as the banking sector took another confidence hit after Credit Suisse (CS) was bought by UBS (UBS) in a Swiss government-brokered deal.

The global cryptocurrency market cap stood at $1.23tn, an increase of 2.4%, according to Coingecko data.

Bitcoin (BTC-USD) soared 28.6% to $28,383, while ether (ETH-USD) rose 13.6% to $1,804.

Read more: Crypto live prices

Investors are pricing in the increased likelihood of a less aggressive rate hike from the Federal Reserve (Fed) at the next Federal Open Market Committee meeting this Tuesday and Wednesday, betting that the central bank will seek to use monetary policy to calm any contagion within the banking sector.

Bitcoin has had a positive correlation with lower interest rates in the past, and speculation of a less aggressive Fed combined with systemic risk fears in the traditional banking sector could be contributing to the upward momentum, according to analysts.

After last week's bankruptcy of Silicon Valley Bank, Credit Suisse also fell into distress. Swiss-based multinational investment bank UBS announced it would buy Credit Suisse for $3.25bn.

Swiss finance minister Karin Keller-Sutter said: "This is no bailout. This is a commercial solution because UBS is taking over Credit Suisse."

UBS chairman Colm Kelleher said: "It's a historic day in Switzerland, and a day frankly, we hoped, would not come.

Read more: FTSE falls as UBS buys Credit Suisse for $3.25bn

"I would like to make it clear that while we did not initiate discussions, we believe that this transaction is financially attractive for UBS shareholders."

Investors in traditional markets reacted with caution, in Hong Kong, the Hang Seng Index (^HSI) tumbled 2.6% by midday trade.

Japan’s benchmark Nikkei (^N225) index fell 1.1%, while South Korea’s Kospi (^KS11) was down 0.5%.

Watch: 'Bitcoin will eat into global finance until it's $1m per coin' | The Crypto Mile

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