• Two of the top United States banks, Silicon Valley Bank and Signature Bank, have just collapsed.
• The collapse has been considered highly bullish for Bitcoin and other leading digital assets.
• Economists anticipate that the Federal Reserve will soon divert from its fight against inflation.
Banking Crisis Looms
The collapse of two of the top United States banks, Silicon Valley Bank and Signature Bank, has been considering the most bullish thesis for Bitcoin and other leading digital assets. Moreover, the top digital assets have gained over 7 percent in the past 24 hours as investors scramble for more secure investment tools.
Could 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 which requires lenders to maintain only a small portion of deposits available for withdrawal while the rest are lent out to fuel economic activity. This scenario could trigger a banking crisis much worse than 2008 financial crisis. With US CPI data set to be announced tomorrow economists anticipate that 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 2012–2013 Cypriot financial crisis could be unfolding which fueled Bitcoin rally 2013 to a great extent .He believes this banking crisis is not related to Crypto but it can prove beneficial for crypto in long term.
Though Bitcoin can fix fractional reserve issue yet it is unable to rally that much as liquidity was already bad before SVB and now it has gone worse due to bank failure .Peter Schiff also tweeted about it on Thursday predicting about Quantitative easing unofficially resuming on Monday with Americans paying for this bailout with much higher inflation which further supports buying gold instead of crypto .
The collapse of two major banks in US has triggered panic amongst investors who are looking towards secure investment options like crypto .This banking crisis is not related directly with crypto but might indirectly benefit it if proper measures are taken by government so that same mistake doesn’t repeat again .