The ongoing banking crisis in the United States has many positive implications for Bitcoin (BTC), according to an executive at electronic wallet company Trezor.
On March 14, Bitcoin topped $26,000, a price level not seen since June 2022, posting the biggest gains so far this year. The multi-month high followed a series of shocking events in the US banking sector, with the closure of operations of banks such as Silicon Valley Bank (SVB), Silvergate and Signature.
According to Trezor Bitcoin analyst Josef Tetek, the current sharp rise in Bitcoin’s price – which is the fastest so far in 2023 – appears to be a direct consequence of the “apparent fragility of the banking system.”
Tetek claimed that the current banking crisis could make Bitcoin emerge as a risk-free safe haven asset. He noted that Bitcoin was created shortly after the world encountered the 2008 financial crisis and was “probably a response to the injustice of the bailouts.”
“Current events are a timely reminder of why we need Bitcoin,” Tetek said, adding that current events are not so good for many crypto companies and assets that are centralized, referring to Circle’s USD Coin (USDC). The analyst stated:
“The current disappearance of certain banks is definitely good for Bitcoin as such, but it is not a good environment for custodians of any kind, and once again we reiterate that one of the safest environments is self-custodian of assets.”
According to Tetek, the recent events surrounding Silvergate and SVB clearly demonstrate that counterparty risk in the banking system is a “serious problem”, even if it is sometimes well hidden. And he added:
“Banks no longer really hold our money, but lend it out and buy volatile assets with it. Depositors are, in effect, creditors to the banks. People are understandably looking for alternatives like Bitcoin.”
Tetek also suggested that Silvergate’s collapse was a “direct result of its business relationship” with failed FTX exchange, while SVB’s collapse was the result of “mismanagement of risk.” He went on to say that SVB had a large exposure to long-term Treasuries, the price of which plummeted as a result of sharp interest rate hikes, while the bank had no hedges. “SVB had little relationship with the cryptocurrency sector,” Tetek added.
Tetek’s remarks come at a time when Barney Frank, a member of Signature Bank’s board of directors and a former US congressman, argues that the latest banking events in the US are related to cryptocurrencies.
“I think part of what happened was that the regulators wanted to send a very strong message against cryptocurrencies,” declared Frank, stating that the problems at Signature were “purely contagion from SVB”.
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