The collapse of two of the top United States banks, Silicon Valley Bank and Signature Bank, has been considered the most bullish thesis for Bitcoin and other leading digital assets. Moreover, the top digital assets, including Bitcoin, Ethereum, and BNB, have gained over 7 percent in the past 24 hours as investors scramble for more secure investment tools.
Could The Banking System’s Failure Prove Beneficial For Crypto?
Notably, the $25 billion bailout by the United States federal government has investors questioning the fractional reserve banking system that requires lenders to maintain only a small portion of deposits available for withdrawal while the rest are lent out to fuel economic activity.
Furthermore, all banks around the world operate in a similar manner, thus piling the risk of higher inflation should more bank runs occur in different countries at an unprecedented rate.
Such a scenario could trigger a banking crisis much worse than the 2008 financial crisis. With the United States CPI data set to be announced tomorrow, economists anticipate the Fed will soon divert from its fight against inflation.
Bitcoin to the Moon?
According to Michael Casey, author of ‘The Age of Cryptocurrency’, a similar situation to the 2012–2013 Cypriot financial crisis could be unfolding. Casey indicated that the Cyprus bank failure in 2013 fueled the Bitcoin rally 2013 to a great extent.
Researcher Nik Bhatia and market analyst Joe Consorti said that the Fed is responsible for the bank’s failure due to its aggressive interest rate hikes, among other monetary easing programs.
“The Fed’s aggressive rate hikes and balance sheet reduction have caused a historic bank failure — fashioning a real-time ad for Bitcoin self-custody,” Bhatia said.
As the banking system faces new challenges, is it time to consider alternative investment options like Bitcoin and Ethereum? How are you diversifying your portfolio?