As Banks Struggle, Is It Time To Reconsider Crypto?

Bitcoin and other forms of digital currency have always represented a niche sector of the financial market despite attracting significant attention in recent years.

A big part of the reason that many people chose not to invest was the fear that their assets would lose value since cryptocurrencies didn’t have a proven track record. But now that traditional institutions are collapsing (like Silicon Valley Bank) or facing serious liquidity concerns (like Credit Suisse), this seems to be Bitcoin’s time to shine.

The bank bust boost

With concerns swirling about the status of banks these days, experts say that more people are starting to see crypto as a way to hedge their financial bets. That trend is evident in the price of Bitcoin, which has gained a massive 30% over the course of just a week.

Furthermore, the Federal Reserve had been expected to keep hiking rates in order to fight inflation, but that could negatively impact what is now a relatively minor banking crisis.

If the current predictions hold and interest rates either remain steady or begin to fall, asset management pro Matt Hougan explained that crypto will continue to benefit.

“It’s purely mathematical,” he said. “Nasdaq went up, crypto did too because the market was pricing in a rate reversal.”

Not everyone agrees, though

Truflation CEO Stefan Rust noted that Bitcoin and other digital currencies don’t always behave as we’d expect.

“What drove early adoption was remittances and purchases,” he noted, which means that macroeconomic trends shouldn’t have a huge impact on long-term value.

So should you invest if you’ve never bought crypto before? That’s up to you … but it’s worth noting that almost 75% of Bitcoin is already in the hands of long-term investors, which means you might be going up against some fierce competition.

Chris Agee March 18th, 2023

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