Bitcoin (BTC), which is the digital currency, rose to $29,000 during the European morning hours of Wednesday. Some investors attribute this to the expectation that the U.S. Federal Reserve would inject money into its economy in the next few weeks following signs of another U.S. banking collapse. TradingView data shows that Bitcoin last reached this level on April 20.

First Republic Bank shares fell 50% Tuesday, after the San Francisco-based bank revealed a drastic drop in deposits. Investors have pulled out over $100 billion in deposits from the bank during the last quarter, causing concern that it could become the third bank, after Silicon Valley Bank and Signature Bank .

The U.S. market was stressed by the slide, as the Dow Jones Industrial Average dropped 1% and the tech-heavy Nasdaq fell almost 2%. Bitcoin’s price, on the other hand, has risen 6.4% over the last 24 hours after safe-haven assets like gold. This has reversed nearly all of the losses that were suffered during last week’s market sell-off.

The overall crypto market capitalization grew 4.9%. Cardano’s ADA token and Solana SOL token were the top gainers among major tokens, jumping over 7%.

Observers attributed the rally to the expectation of a Fed liquidity injection in an effort to protect the capital markets.

Jake Boyle is a director at retail crypto brokerage Caleb & Brown. He wrote an email to CoinDesk that stated, “With First Republic Bank appearing to be in danger of going under, I believe the market is expecting yet more liquidity injections in order to prop up an American banking system which is still in a state of crisis.”

Bitcoin, therefore, is ahead of these expectations. He said that cracks are appearing in the financial system, even though they may be relatively subtle at this time. It will be difficult for the Fed, going forward, to maintain its tightening policy. Bitcoin’s recent rally has more to do about liquidity injections and growing expectations that the Fed will have to stop its tightening regime fairly soon or else there could be even greater turmoil in the banking system.

UPDATE: Updates crypto prices and headlines throughout.

Sheldon Reback is the editor.