Cryptocurrencies and Bitcoin fall on fears of market illiquidity

The gains seen following the good February inflation data from the United States seem to have fizzled out as the market fears a lack of liquidity following the failure of Silicon Valley Bank (SVB). As reported by 'Reuters', the Federal Deposit Insurance Corporation (FDIC) indicated that the $40 billion it borrowed from the US Treasury to intervene in SVB will not leave the department headed by Janet Yellen without room to maneuver.

Along with that $40 billion, there were other similar withdrawals that caused the Treasury General Account (TGA) balance to shrink by $100 billion in one week. On Tuesday, the FDIC returned that $40 billion to the Treasury, which has already warned that it could run out of money to pay the country's bills if a debt ceiling increase is not approved, something complicated since Democrats and Republicans do not seem to be in agreement.

The Treasury has never issued a specific forecast for when it would run out of room to maneuver. In January, Yellen indicated to Congress that extraordinary measures were "unlikely" to run out before early June, urging lawmakers to reach an agreement on the debt limit. The Congressional Budget Office estimated that the Treasury could hold out until sometime between July and September without a debt ceiling increase, but the timing was uncertain due to the pace of revenues and economic developments.

On the other hand, there is some doubt about how the Federal Reserve (Fed) will act after the dramatic turn the market has taken in the last week. According to CME's FedWatch tool, there is almost a 70% chance that the hike will be "only" 25 basis points; a week ago, a 50 basis point hike was more likely as the days passed. Experts such as those at Goldman Sachs believe that the central bank should pause rate hikes, while others, like the experts in Nomura, are betting on a 25 basis point cut.

At the same time, Credit Suisse´s state is clearly a cause for concern. The bank has plummeted on the stock market over the last two days and has dragged the entire banking sector down with it, with some analysts stating that we could be facing a "Lehmann Brothers moment". The Swiss central bank has agreed to lend 50 billion to the Zurich-based entity, as well as buy back debt to improve market confidence.

In the crypto sphere, it should be noted that the US Justice is investigating Signature Bank for allegedly violating federal laws. On the other hand, the Administration has requested the suspension of the purchase agreement between Voyager and Binance US, the US subsidiary of the world's largest exchange, until the legal objections presented by the SEC are resolved.

In the rest of the market, there have been generalized falls among the main altcoins. Cardano (ADA), Polygon (MATIC), Dogecoin (DOGE) and Solana (SOL) registered drops of up to 8%. On the positive side, Binance coin (BNB) rose by around 2%.