Banking Crisis Looms: Is Crypto The Future Of Secure Investing?

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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.

In theory, the collapse of Silicon Valley Bank is highly bullish for #Bitcoin.

Bitcoin literally fixes the fractional reserve issue.

However, Bitcoin can barely rally 2% now.

This is because the real problem is liquidity.

Liquidity was already bad before SVB.

Now it’s gone.

— The Kobeissi Letter (@KobeissiLetter) March 12, 2023

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.

Looks like my hunch was correct. This tweet was from Thursday, the day before #SVB failed. QE unofficially resumes on Monday. #Powell folded. The #Fed has pivoted. Americans will pay for this bailout with much higher #inflation. Buy #gold. https://t.co/MMd5xbMh6N

— Peter Schiff (@PeterSchiff) March 12, 2023

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.

THIS IS A BANKING CRISIS, NOT A CRYPTO CRISIS

My journey into Bitcoin began in 2013 when the Cyprus bank failure prompted a rally in BTC as people suddenly saw its value.

Similar sentiment now in the big bounce over $20,000?

THIS IS A BANKING CRISIS, NOT A CRYPTO CRISIS

— Michael J. Casey (@mikejcasey) March 11, 2023

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?