This article is exclusively published by Binance Square author: Chuan Shuo Crypto. It may not be reproduced and published on Binance Square without authorization.

1. Review of the history at the beginning of this year:

  • At the beginning of the year, as Silicon Valley Bank (SVB) and other bank stocks experienced a shocking "big dive" on Wall Street, the price of Bitcoin, the "ancestor" of cryptocurrency, soared to $26,000, reaching its highest level since June 2022 this year, achieving a sharp rebound.

  • The concept of Bitcoin and cryptocurrencies in general was invented as a countermeasure to and alternative to the traditional banking system, so on the surface it’s no surprise that when banks fail, investors turn to cryptocurrencies.

2. Impact of the banking crisis on cryptocurrencies:

  • What’s odd about the healthy cryptocurrency market is that the three banks that collapsed in the U.S. — Silicon Valley Bank, Silvergate, and Signature Bank — were all institutions with large exposure to the cryptocurrency market.

  • Customers began running on banks, moving funds from smaller lenders to larger ones, causing heavy losses at regional financial institutions such as First Republic Bank, Western Alliance Bancorporation and PacWest Bancorp before trading was suspended.

  • The shockwaves of this incident also affected Europe, especially Credit Suisse, which was dragged to a historic low, with a loss of 25% at one point.

  • To stem losses at home, the Federal Reserve took emergency action, launching an emergency lending program for distressed banks at risk of collapse following catastrophic losses at Silicon Valley Bank.

  • The stock market appears to have recovered, while the cryptocurrency market remains healthy despite having fallen from its highs at the height of the banking crisis.

3. Advantages of Cryptocurrency VS Traditional Banking:

  • Silicon Valley Bank is one of the top 20 banks in the U.S. and counts many cryptocurrency-related venture capital firms among its clients. In fact, more than $6 billion in assets from blockchain venture capital are held by Silicon Valley Bank.

  • The tech-focused bank’s collapse also led to an unusual depegging of USDC issued by its partner Circle, disappointing holders, though the stablecoin has since recovered to near parity with the dollar.

  • Despite the crash, the event appeared to be a boon for the broader cryptocurrency market, perhaps because the Fed’s actions convinced investors that it would not raise interest rates further, or that the rate hikes would be less than before.

  • This expectation often promotes “high-risk” non-traditional investments such as digital assets.

4. Bitcoin/Ethereum Advantages Summary:

  • Cryptocurrencies such as Bitcoin and Ethereum (ETH) have the added attraction of

  • They offer a different vision of a monetary system, free from the interference of middlemen and immune to events like the Silicon Valley bank debacle.

  • Cryptocurrencies always benefit when vulnerabilities in the banking system are exposed.

  • Summary: The next round of cryptocurrency/Bitcoin bull market is likely to be triggered by the "US banking crisis"; you can continue to pay attention to the development of the US banking industry and stock movements. #BTC #ETH