The ongoing banking crisis in the United States has many positive implications for Bitcoin (BTC), according to an executive at hardware wallet firm Trezor.
On March 14, Bitcoin broke above $26,000, a price level not seen since June 2022, posting the biggest gains this year so far. The multi-month high followed a series of shocking events in the US banking industry, with banks including Silicon Valley Bank (SVB), Silvergate and Signature going out of business.
According to Trezor Bitcoin analyst Josef Tětek, the current sharp rise in Bitcoin’s price, which is the fastest price increase so far in 2023, appears to be a direct result of the “apparent fragility of the banking system.”
Tětek said that the current banking crisis could see Bitcoin emerge as a safe and risk-free asset. He stressed that Bitcoin was created shortly after the world faced 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,” Tětek said, adding that current events are not so good for many businesses and crypto assets that are centralized, referring to the Circle’s USD coin (USDC). The analyst stated:
“The current demise 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-custody of assets.”
According to Tětek, the recent events with Silvergate and SVB clearly show that counterparty risk in the banking system is a “serious problem”, even if it is sometimes well hidden. He added:
“Banks no longer hold our money, but lend it out and buy volatile assets with it. The depositors are, in fact, the creditors of the banks. People are understandably looking for alternatives like Bitcoin.”
Tětek also suggested that Silvergate’s collapse was a “direct result of its business relationship” with failing cryptocurrency exchange FTX, while SVB’s collapse was the result of “poor risk management.” He went on to say that SVB had a large exposure to long-term Treasuries, the price of which collapsed as a result of sharp interest rate hikes, while the bank was unable to hedge. “SVB had little connection to the crypto industry,” Tětek added.
Related: SVB Crisis: Here Are the Crypto Firms Denying Exposure to Troubled US Banks
Tětek’s comments come amid Signature Bank board member and former US congressman Barney Frank arguing that the latest US banking events are connected to cryptocurrencies.
“I think part of what happened was that the regulators wanted to send a very strong message against cryptocurrencies,” Frank fixedclaiming that the problems at Signature were “purely contagious from SVB”.
