Crypto Market Sees Boost Following U.S. Banking Crisis
May 5, 2023, 09:05am EDT
Bitcoin has almost doubled in value since hitting record lows of around $15,000 at the end of last year. Its recent gains, as well as those of other cryptocurrencies like ethereum, have been attributed to a potential US banking crisis that has cast doubts over the Federal Reserve’s ability to contain the situation. With a looming $31.4 trillion earthquake, experts are predicting that investors could soon turn to cryptocurrency as a “catastrophic scenario” hedge.
JP Morgan Analysts See US Banking Crisis as Pushing Traders Towards Bitcoin
JP Morgan analysts have suggested that bitcoin’s recent surge in popularity is, in part, due to the banking crisis currently gripping the US. The analysts explained that while institutional investors have been showing increased interest in gold, retail investors have been moving into bitcoin to hedge against the potential of a US recession this year. The move to bitcoin comes despite the bank sell-offs and assurance from Federal Reserve chair Jerome Powell that the US banking system remained “sound and resilient” following the Fed’s 10th consecutive interest rate hike.
Investor Admits Losses of $1 Million Due to Trillions in Government Printing
A well-known tech investor has admitted to losing $1 million due to government printing of more money, highlighting the growing distrust in traditional fiat currency. The US banking crisis has increased demand for gold as a proxy for lower real rates and a hedge against catastrophic scenarios, but JPMorgan researchers assert that retail investors are looking to cryptocurrencies for the same reasons. Following this trend, cryptocurrency investors could surge further in the coming months.
Rapid Rate Hikes Blamed for US Bank Problems
The Federal Reserve’s rapid series of rate hikes has been partly blamed for the US banks’ current problems. This week’s Federal Reserve interest rate hike will likely worsen the situation and add pressure to regional bank balance sheets, according to Nauman Sheikh, head of treasury management at Wave Digital Assets. As macro factors continue to impact the markets, and against the backdrop of a risk-off mode in cryptocurrencies, bitcoin and ethereum performance will continue to dominate.
According to https://www.forbes.com/sites/digital-assets/2023/05/05/catastrophic-scenario-jpmorgan-sees-us-banking-crisis-as-boosting-bitcoin-after-300-billion-ethereum-and-crypto-price-surge/
The material in this article is written on the basis of another article.