After the collapse of the Silicon Valley Bank (SVB) recently, investors have become very cautious. The weekend saw Dogecoin succumb to significant overhead pressure, which increased market concerns.
However, there was a rebound in the crypto market after news hit that the US government would step in for mitigating the damage.
This also benefitted the leading meme token by market cap, as Dogecoin rose almost 9% and its trading volume climbed by almost $800 million.
Reports indicate that the downfall of SVB started when the bank decided to make considerable investments in US government bonds that were considered quite secure.
They had long maturity periods and the bonds also includes those that were supported by mortgages. There is an inverse correlation between interest rates and bonds.
Therefore, the bank had to deal with hefty losses in its bond investments when the Federal Reserve began to hike interest rates for containing inflation.
SVB faced liquidity issues, which pushed it into selling its bonds for a loss, resulting in panic amongst clients and investors. It took only two days for the bank to collapse after it disclosed the asset sale.
SVB’s liquidity crisis resulted in global panic, as clients began to withdraw their funds. Issuer of the USDC stablecoin, which is the second largest in the market, Circle, also announced its exposure to the bank.
The company has reserves worth $3 billion stuck. This resulted in a massive sell-off in the crypto market and a 10% drop was recorded in the USDC stablecoin from its dollar peg.
Investors were worried about a repeat of the TerraUSD (UST) crash that had happened in May last year, which resulted in panic selling.
Bitcoin also saw its price drop below the $20,000 mark, which pulled down most of the cryptocurrencies in the market.
The sell-off in the crypto market saw its total capitalization fall below the $1 trillion mark once more. But, Monday brought renewed interest, due to which market cap climbed to $1.05 trillion once more.
The explosive selling that occurred over the weekend also took its toll on Dogecoin. The popular meme token had opened the month at a price of $0.0825.
But, the sell-off saw DOGE test the support level of $0.0625. The meme coin remained suppressed during the weekend because retail traders turned bearish to benefit from the short positions available.
However, Monday saw a 5% rise in Elon Musk’s favorite crypto, as it was trading at a price of $0.06914. There has also been a rise in the trading volume of the meme coin.
Within 24 hours, it had climbed to $500 million, which was an increase of 90%. Increase in trading volume are often an indicator of liquidity, along with an increase accumulation of tokens.
This means that a rising trading volume is considered a positive sign for the token. During the week, DOGE investors are likely to be focused on securing higher support, preferably over the $0.07 mark.