• The recent bank failure of First Republic Bank marks the third major bank failure this year.
• This banking crisis has caused a fear that another financial crisis similar to 2008 is coming again.
• Bitcoin is being seen as a “safe haven” asset, and its value has risen significantly due to investors turning to it for stability during this time of economic and financial strife.
Background on First Republic Bank
Early last month, regulators acquired First Republic Bank and circulated most of its assets and deposits to institutions like JPMorgan Chase. This marks the third major bank failure this year, joining names like Signature, Silvergate, and Silicon Valley.
Bitcoin as a Potential Safe Haven
Alex Thorn – head of firmwide research at Galaxy – commented in a recent interview about how the banking crisis narrative can continue to be beneficial for Bitcoin: It’s unclear whether the banking crisis narrative can continue to be a boon for bitcoin. Overall, the market lacks clear positive near-term catalysts, with supply issues overhanging bitcoin… Bitcoin accumulation by small addresses is outpacing issuance, and we expect Ethereum staking to increase, each of which provides a supportive supply narrative.
Impact of Banking Crisis on Economy
The banking crisis in America and Europe has been two-fold in many ways. On the one hand, it’s put many people into a state of fear that another big financial crisis like the one from 2008 is coming back again soon. At the same time though, it can be argued that this current banking crisis has also brought about an emergence of Bitcoin as a new “safe haven” asset status with more people backing these digital currencies as well as investing in them in order to keep their wealth stable during this period of financial turmoil.
Supportive Supply Narrative
Thorn further commented: Bitcoin and ether started 2023 inorganically cheap, allowing for plenty of room to move higher off a low-base effect. A widening banking crisis became evident in March, and the contrast with bitcoin’s transparent and decentralized nature provided a further leg up for crypto prices overall.
Conclusion
Overall it appears that while there are still some uncertainties regarding how much impact the current banking crises will have on Bitcoin’s future value growth potential; there are still many reasons why investors should consider investing in these digital currencies as they provide an attractive safe haven asset status during times when other traditional markets may be experiencing volatility or downturns due to external factors such as economic or political instability or events like pandemics or natural disasters occurring around the world (such as what we have recently witnessed with Covid-19).