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SINGAPORE: Bitcoin and other cryptocurrencies rallied on Monday after US authorities announced plans to limit the fallout from the collapse of Silicon Valley Bank (SVB) and as cryptocurrency firm Circle assured investors its peg was secure.

The US Treasury and Federal Reserve announced a range of measures to stabilise the banking system and said depositors at SVB would have access to their deposits on Monday.

The moves came as authorities took possession of New York-based Signature Bank, the second bank failure in a matter of days. Stablecoin USD Coin (USDC), which had lost its 1:1 dollar peg and hit an all-time low on Saturday on concerns over the exposures of Circle, the firm behind USDC, to Silicon Valley Bank, recovered.

It was at $0.9917, closer to par and up from last week’s lows around $0.88.

Circle CEO Jeremy Allaire said in a tweet its $3.3 billion USDC reserve deposit held at the collapsed Silicon Valley Bank will be fully available when US banks open Monday.

“Circle’s USDC operations will open for business, including with new automated settlement via our new partnership with Cross River Bank,” Allaire said.

Bitcoin was up about 8% from Sunday’s lows, trading at $22,568.

US officials said depositors of New York’s Signature Bank, which was closed on Sunday by the New York state financial regulator, would also be made whole at no loss to the taxpayer.

Signature, like SVB, had a clientele concentrated in the tech sector, and the securities on its balance sheet had eroded as interest rates rose.

Bitcoin tops $25,000 to hit eight-month high

As of September, almost a quarter of Signature’s deposits came from the cryptocurrency sector, but the bank announced in December that it would shrink its crypto-related deposits by $8 billion.

Most analysts, however, cautioned against assuming all is well with market sentiment after these measures. “Markets remain unsettled from the SVB failure,” said Alvin Tan, head of FX strategy at RBC Capital Markets in Singapore.

“The market turbulence sparked by SVB has upended rising market expectations on the Fed rate path.

The situation is evolving, but volatility looks set to remain elevated in coming days.“ Crypto exchange Bitstamp, meanwhile, said it would continue to operate normally, despite Signature Bank’s failure.

Major exchange Binance said it would convert the remainder of a $1 billion industry recovery initiative fund from its BUSD stablecoin to native cryptocurrencies such as bitcoin, ether and Binance Coin, its CEO Changpeng Zhao said in a tweet on Monday, citing recent changes in stablecoins and the banking industry.

Binance launched the Industry Recovery Initiative (IRI) in November to help crypto projects facing a liquidity crisis after the collapse of rival FTX.

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