As banks crumble, Bitcoin believers revel in ‘told-you-so’ moment

As banks crumble, Bitcoin believers revel in ‘told-you-so’ moment

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As members of the media lingered near the entrance to the headquarters of Silicon Valley Bank this week, a Bitcoin true believer seized an opportunity.

He drove a Budget moving van directly in front of the building’s entrance, so everyone could see the message taped to the side: “BE YOUR OWN BANK,” it read, between a doctored image of Federal Reserve Chairman Jerome Powell, holding a “Buy Bitcoin”. ” sign and the orange logo for the original cryptocurrency. A video of the stunt made for social media, set to Pink Floyd’s “Money” as the soundtrack, was tweeted by an account with the username @cryptograffiti.

After an epically horrible 12 months for the cryptocurrency industry, Bitcoin evangelists are enjoying a moment not to mention a big rally in their favorite coin, which has soared more than 30% in the past seven days, putting in full view the key level of $30,000. To them, the fallout from the Silicon Valley Bank failure only serves to underscore a key vulnerability in the fractional-reserve banking system that Bitcoin was meant to fix: It’s all based on faith that your money will be there when you need it.

As put by the original white paper proposing Bitcoin in the wake of the global crisis financial crisis, the traditional system works well most of the time, but “it still suffers from the inherent weaknesses of the trust-based model.” That weakness was ignored by many in the age of low interest ratesbut now it’s back to front and center.

“An environment where higher interest rates after a period of extremely low interest rates are creating bank runs is about as perfect a use case for Bitcoin as one can think of,” said Stephane Ouellette, CEO of FRNT Financial. inc.

True, in the wake of last year’s series of cryptocurrency busts, including the implosion of the digital asset exchange FTX and all the dominoes in the crypto lending space that have fallen since, trust in digital asset market intermediaries is arguably as low, if not lower, than faith in regional banks. However, nothing changed in the rules that dictate the growth of Bitcoin’s supply, a stark contrast to the impromptu and hard-to-predict responses by central banks and governments to the turmoil in traditional banking.

FUD, short for fear, uncertainty and doubt, which traditional finance had long pointed at cryptocurrencies, is now going in the opposite direction. However, while the revival of Bitcoin’s origin story has given true believers an “I told you so” moment, it’s not necessarily what drove the coin’s price up during the recent banking chaos. Many in the market believe that cryptocurrencies are rallying not because of fear triggered by the crisis itself, but because of the aggressive response from the government and the Federal Reserve that has seen hundreds of billions of dollars added to or committed to the banking system. and drastically changed the outlook for interest rates.

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