By Landon Manning
In the wake of the largest international bank collapses since the 2008 financial crisis, it’s becoming increasingly clear that Bitcoin’s trustless and decentralized nature was created as an antidote to the increasingly unstable banking system, and that these same principles will prove to be an antidote today.
The first quarter of 2023 has seen a contagious spread of bank collapses, similar to the cascading failures of crypto businesses after FTX’s failure in 2022. Silicon Valley Bank (SVB), an essential component of the burgeoning U.S. tech industry, blossomed to manage billions of dollars as it provided essential liquidity for a variety of tech startups. However, since the COVID-19 pandemic, much of the free-flowing investment capital and low interest rates of the 2010s vanished entirely. Anxiety over a downturn in the tech industry mixed with social media panic to create a bank run that brought the place to its knees, and it wasn’t alone. Signature Bank, in New York City, shuttered two days later and days later the Swiss bank Credit Suisse suffered a similar fate.
These rapid events have been accompanied by a dramatic rise in the valuation of bitcoin, with BTC rising from around $20,000 to $28,000 in a matter of days following the banking crisis. Although Bitcoin has been on a slow and steady recovery since the fallout of the FTX debacle, this represents the strongest jump bitcoin has seen since then. What’s even more impressive is the remarkable way that this boom for bitcoin has come amid a general downturn for the rest of the crypto industry, marked by Circle’s USD Coin (USDC) losing its peg with the dollar and the U.S. Securities And Exchange Commission (SEC) suggesting many crypto assets could come under more regulatory scrutiny.
Then, the fall of Credit Suisse brought a new dynamic to these bank failures, transforming it into a global concern. The global financial industry spent a decade growing cozy around an infrastructure of easy capital and nonexistent interest rates, and both of those things have now apparently been destroyed. Even if the largest banks have yet to fail, the same economic conditions of failure are everywhere. Many of the most painful lessons of the 2008 collapse have slowly been forgotten, but Bitcoin remembers. As the global economic system moves towards deeper and deeper anxiety, it’s important to remember why so many people bet on bitcoin.
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