Overview
• The collapse of two top US banks, Silicon Valley Bank and Signature Bank, has been seen as a bullish thesis for Bitcoin and other digital assets.
• Investors are now looking for more secure investment tools due to the $25 billion bailout by the US federal government.
• Michael Casey claims that a similar situation to the 2012-2013 Cypriot financial crisis could be unfolding, which could result in a massive Bitcoin rally.
The Banking System’s Failure Could Prove Beneficial For Crypto
The fractional reserve banking system has been brought into question by the recent bankruptcy of Silicon Valley Bank and Signature Bank. In this system, lenders are only required to maintain a small portion of deposits available for withdrawal while the rest is lent out to fuel economic activity. This puts investors at risk if multiple bank runs occur around the world, resulting in higher inflation rates. Therefore, many investors are now turning to cryptocurrencies such as Bitcoin, Ethereum and BNB as they look for more secure investment tools.
Bitcoin Could Benefit From Banking Crisis
Peter Schiff stated that with liquidity already being bad before Silicon Valley Bank’s failure, he believes that if a banking crisis were to occur it would be highly beneficial for Bitcoin as it fixes the fractional reserve issue that has caused so much trouble in traditional banking systems. Moreover, economist anticipate that with US CPI data set to be announced tomorrow, the Fed will soon divert from its fight against inflation which would further boost demand for digital assets like Bitcoin.
Cyprus Financial Crisis As An Example
Author Michael Casey highlighted how during 2013’s Cyprus bank failure there was an influx of people investing in Bitcoin as they saw its value increase tremendously during this period of time. He believes that with similar sentiment now surrounding crypto markets there could be another massive rally ahead should a similar event take place again on an international scale.
Conclusion
In conclusion, given the current uncertain economic landscape due to multiple banking failures investors are increasingly turning towards cryptocurrencies like Bitcoin and Ethereum in search of more secure investment options compared to traditional banking systems which put them at risk when facing major crises like these in future times.
