Bitcoin, ethereum and cryptocurrencies once again enter the limelight due to a possible new banking crisis in the United States that is just getting started, as per the warning coming from another ethereum co-founder, Charles Hoskinson. Despite the serious warning issued by Vitalik Buterin of a possible bull run, the bitcoin price has almost doubled since plummeting to lows of around $15,000 per bitcoin late last year. Along with it, ethereum, the second-largest cryptocurrency in the world, showed an incline too.
Hoskinson said that the banking crisis will be worse than the global financial crisis in 2008 that gave birth to bitcoin. In 2008, failed banks held about $373 billion in tied-up assets. Comparatively, Hoskinson stated that we now have over $540 billion. It is just the beginning. The entire business model of these banks is falling apart when pushed a little bit, and institutions like Silicon Valley Bank and Signature Bank are being politicized and globalized.
The crisis began in March when sudden deposit flight from Silicon Valley Bank and Signature Bank caused the Federal Reserve to take emergency measures. Panic then spread to Credit Suisse, which had to be rescued by UBS. Regulators seized First Republic Bank FRC this week and sold its assets to JPMorgan, which is the largest U.S. bank by assets. Chief Executive Jamie Dimon of JPMorgan played a key part in the 2008 financial crisis and stated that their government invited them and others to step up, and they did.
However, this crisis is partly caused by the Federal Reserve’s rapid series of interest rate hikes over the last year and the attempt to curb soaring inflation. Others have warned that this banking crisis will balloon out of control if confidence in the system is restored. The confidence in a financial institution takes decades to build and destroys within days. As each bank falls, the weaker ones begin to wobble.
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The material in this article is written on the basis of another article.