The Fed, of course, controls interest rates. Not directly, and not all of them, but all of them are very strongly influenced by Fed policy, by design. When rates are high, or what used to be called normal, banks can make pretty good money just making high quality loans and earning interest on them. But when rates are low, like, zero, as they have been recently, they can't even make enough money that way to keep the lights on, so they have to add risk somehow.
Basically they can add credit risk, by making riskier loans at higher rates, like we saw in the years leading up to the 2008 crisis; or they can add duration risk, where they could end up being stuck with underperforming assets while their prices deteriorate because they can't sell them - as has been happening this time.
SVB, like most other US banks in the last few years, had been filling its portfolio with longer term US government bonds - supposedly the safest investment vehicle on earth. But if you're a bank there are 2 ways to buy them. You can declare, at purchase time, that they are "available for sale" (AFS), or that they are "hold to maturity" (HTM). If they're AFS you can sell them whenever you need to, to raise capital, or whenever you want to, to try to maximize profits (or minimize losses).
AFS assets are "mark to market" - if their prices fall, those unrealized losses impact your balance sheet, and you could find yourself undercapitalized even with unrealized losses, and the regulators will come ruin your day. But if they're HTM, they will appear on your balance sheet at the purchase price even if their prices are tanking, and if you're holding to maturity anyway it doesn't theoretically matter because once they mature these losses will disappear.
So, SVB - like most banks, and especially so-called regional (read: small) banks - filled its portfolio with HTM assets. The market value of that portfolio started tanking when the Fed started raising interest rates and the yield curve became inverted (short term bonds having higher yield than long term bonds), but maybe that didn't matter because on the balance sheet their book value was holding steady. Except, at the same time, it was bleeding deposits.
This was for two main reasons. First, most of its customers were tech startups, who suddenly found themselves unable to raise new rounds of funding, which meant they were spending the money in their accounts, and not putting money back in. And second, because under conditions of extremely low interest rates institutional depositors aren't trying to earn 0.05% on their deposits when they could be earning 5% in a money market account.
Meanwhile, around 25% of its investment portfolio was AFS, meaning the unrealized losses affected its capitalization, and it was perilously close to being legally insolvent.
Now it had many tens of billions of dollars in HTM assets that could technically be sold to raise cash. But if it sold even one of those, it would legally cause that entire portfolio to convert to AFS, and the previously-unrealized losses would have instantly rendered it legally insolvent, so that was not an option.
It could sell its AFS portfolio, but then it would have to realize massive losses on assets whose prices had been tanking. That's exactly what it did, because it absolutely had to. But it wasn't enough, as a minority of its portfolio. So it also borrowed as much as it could, and intended to raise even more money by selling equity. As a publicly traded company, it had to announce all this.
At least one very large VC/private equity firm noticed this, understood its implications, and told its portfolio companies to move their money out of SVB. This started a run, and in a single day there were $42B in withdrawal demands against SVB, and it was all over.
First point: the run triggered the SVB collapse, it didn't cause it. By sane accounting rules it had been insolvent since September of last year, but it wasn't subject to sane accounting rules.
Bigger point: while SVB was in the worst possible situation given the circumstances, making it the first to buckle, a lot of banks are in a very similar situation. Which is why, in spite of all the political rhetoric that there is no systemic risk, the Treasury and the Fed and everybody else in and around the federal government have been taking unprecedented steps to try to keep the problem contained.
Step 1: Bail out SVB's depositors (but not the bank itself or its investors). Never been done. The FDIC only covered a tiny percentage of SVB's deposits, but all were made whole.
Step 2: Fed announces banks can borrow against certain assets (the kinds they generally buy) "at par", meaning at their purchase price even if their market prices are depressed. This would have prevented SVB from having to take suicidal emergency measures to stay afloat, and could save many other banks from a similar fate, which might prevent runs that would trigger (not cause!) similar outcomes.
Step 3 (since those were not enough): Fed essentially announces a plan to bail out foreign banks all over the world! They can't just do that, of course. Very, very bad look while domestic banks are fighting for their lives. But there's something else it can't do: have US treasuries become worthless because foreign holders all start dumping them into an increasingly illiquid market with few buyers. So, it offers a "swap line" to foreign central banks (actually created in 2007 but "enhanced" by the recent announcement) to provide unlimited dollar-denominated liquidity for US treasuries. Result: now every bank in the developed world can borrow against US treasuries at par, so they don't have to sell them just because they're becoming worthless. The losses are now borne by the Fed, but they don't care, they can endure infinite losses.
All this amounts to many, many trillions of new dollars being created and put into circulation worldwide, and highly concentrated in the US, in the likely scenario where the mere existence of these programs fails to prevent them from being used.
That's not gonna be good for inflation. That, along with a lot of new fear and uncertainty about the safety of trusting banks with money, is why Bitcoin prices have been taking off.