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Allianz chief economic adviser Mohamed El-Erian says Silicon Valley Banks perfect storm collapse resulted from mismanagement, lapses in supervision by the Fed, and its handling of interest rate hikes.

Bitcoin has emerged as an unlikely benefactor as investors flee banking stocks amid contagion fears following the collapse of Silicon Valley Bank.

The largest cryptocurrency by market value topped $28,000 over the weekend, the highest level since June. For the year, it has gained over 60%, making it one of the best-performing asset classes of the year, blowing past the S&P 500s 2% gain through Friday.

Source: Dow Jones Market Data Group

The upward move may be tied to an unexpected shift in the Federal Reserves battle plan to bring down inflation.

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"A strange element to the rally is it comes alongside recent troubles in the banking sector, particularly in two banks [Silicon Valley Bank and Signature] that were heavy lenders to the crypto industry. What does seem to be a major tailwind for bitcoin has been the rapid change of Fed expectations" Jim Iuorio of TJM Institutional said on CME Active Trader.

As of Sunday, the CMEs Fed Watch Tool shows 38% of the market is expecting the Fed to pause interest rate hikes at Wednesdays meeting, with 62% expecting a smaller 25 basis point hike. Zero participants expect a rate cut. The decision will come at 2:30 p.m. ET, followed by Chairman Jerome Powell's press conference.

Bitcoin (Reuters/Benoit Tessier/Illustration/File Photo / Reuters Photos)

Ark Invest founder, CEO and CIO Cathie Wood told "The Claman Countdown" Friday bitcoin is benefiting from banking fallout and a recent shift for the Fed to pause its rate hike strategy and reverse course.

"Recently, when we felt Coinbase was so misunderstood, and when it seemed like the banking regulators were blaming crypto for what's going on right now which is not the case at all at we actually thought, Nope, we think crypto assets could be a beneficiary, a flight to safety,'" she explained.

"And we also see, in the case of Coinbase, it is, despite what a lot of people think, it is trying to be as regulatory compliant as possible with this new asset class, while, at the same time, educating regulators on what this new asset class is all about."

Other crypto is also benefiting, including Ethereum, which has advanced over 40% this year.

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How Bitcoin is benefiting from the banking crisis - Fox Business