The past few weeks have been full of news about failing banks, but in the meantime crypto is still holding up well. Coinbase thinks the banking crisis will only be positive for the cryptocurrencies industry.
Crypto Remains Strong Despite Banking Crisis
That writes CoinDeskwhich claims to have read a research report from Coinbase. Coinbase wrote last Friday that cryptocurrencies have remained strong mainly due to technical reasons during the problems at various banks.
“More people appreciate that there are alternatives to the pitfalls of the current financial system,” writes David Duong, the head of the crypto exchange’s institutional research arm.
Open blockchains and transparent smart contracts are a stark contrast to the poor risk management that the US banking sector is now characterized by, according to Coinbase’s researchers.
The crypto exchange does mention losing relationships with banks as a risk for crypto companies. Some banks still refuse to do business with crypto exchanges due to regulations and fear of high-risk business partners. This led, among other things, to the crypto exchange Kraken also wanting to start as a bank.
Bank crisis as a result of higher interest rates?
The US central bank, the Federal Reserve, has caused the value of US government bonds to plummet by allowing interest rates to rise so fast. However, the US banking system also uses those same assets as collateral. CoinDesk cites this as a major reason for the problems at several US banks, including Silvergate, Silicon Valley Bank (SVB) and Signature Bank (SBNY).
Last weekend, we wrote about a study that concluded that there may be an additional 186 U.S. banks that are at high risk. Meanwhile, bitcoin (BTC) and many other cryptocurrencies do indeed seem to be doing just fine. Not only from a technical perspective, but also a lot of races. In just over a week, the bitcoin price has already risen by more than 40%.