Unprecedented Since 1984!
According to the latest figures released by the Federal Deposit Insurance Corporation (FDIC), total bank deposits in the United States decreased by 2.5 percent in the first quarter of this year, marking an unprecedented decline in the past 39 years. The decrease in total bank deposits in the US is considered to have a positive impact on the leading cryptocurrency Bitcoin (BTC) and altcoins.
A $472 billion outflow from bank deposits in 3 months in the US
According to the quarterly report recently published by the FDIC, reflecting banking data for the first quarter of 2023, total bank deposits in the US decreased by a record $472 billion, breaking a record of the past 41 years.
The report stated, "The three-month decline in bank deposits was the largest reported in the QBP since data collection began in 1984. This is the fourth consecutive quarter in which the industry has reported lower bank deposit levels."
According to the FDIC, a significant portion of the decrease in bank deposits is due to uninsured deposits. Currently, the maximum insured amount set by the FDIC for bank deposits is $250,000, and depositors seem to be taking action to protect their deposits above $250,000.
The decrease in bank deposits is largely following the bankruptcies of Signature Bank, Silicon Valley Bank, and First Republic, triggered by the Federal Reserve's aggressive interest rate hikes. As depositors in the US abandon the banking system, there have been significant cash inflows in money market funds on a weekly basis. According to Crane data, assets held in money market mutual funds reached a record level of $5.6 trillion in the first quarter of the year.
The impact of the decrease in total bank deposits in the US on cryptocurrencies
Market experts and observers emphasize that the decrease in total bank deposits in the US could potentially have a positive impact on cryptocurrencies.
Experts point out that bank deposits are tied to centralized financial institutions and subject to government regulations, while cryptocurrencies generally have a decentralized structure and provide individual control and anonymity, which can be attractive to those seeking personal financial freedom. Additionally, the fact that cryptocurrencies are a globally accessible and liquid asset class that transcends borders is emphasized as a reason for investors to turn to the cryptocurrency market as a safe haven and invest their deposits in specific altcoins, particularly Bitcoin.
Indeed, the bankruptcies of Signature Bank, Silicon Valley Bank, and First Republic caused a surge in the largest cryptocurrency, BTC, pushing its price up to $31,000.
This article is not investment advice. Anyone considering investing should do their own research and take their own risks.
