As concerns about traditional banks mount following the forced closures in the United States, now should be bitcoin’s (BTC) time to shine, according to banking giant Morgan Stanley. This has to do with that holders of bitcoin can be their own bank and are thus protected against counterparty risk.
Bitcoin in response to banking drama
The Bitcoin whitepaper was released six weeks after the dramatic collapse of Lehamn Brothers in 2008. So the current banking drama is exactly why Bitcoin has come to life.
Morgan Stanley notes that Bitcoin was designed in a way that allows people to store value in their own wallet without the need for an intermediary to store the value for them or facilitate transactions.
By your own private keys there is no one else to place your trust in but yourself. When you store your bitcoin with a crytpo exchange, they actually own your BTC. Not your keys, not your crypto is a well-known saying within the world of crypto for a reason.
On social media, proponents of crypto and the underlying blockchain are taking advantage of the current banking crisis. Like this said The Block editor Frank Chaparro said: “literally long on bitcoin, short on banks. It’s time”.
Bitcoin not isolated from banking system
However, Morgan Stanley also believes that in practice Bitcoin is “not isolated from the traditional banking system” as the BTC price is backed by “USD bank liquidity which makes it trade as a speculative asset rather than a currency.” ‘ said the Morgan Stanley research report.
Although the Bitcoin network is separate from traditional banks, the price of BTC, and thus its purchasing power, is still influenced by central bank policies and needs banks to facilitate inflows into the crypto market.
Morgan Stanley analysts Sheena Shah and Kinji C Steimetz wrote the following:
“Crypto prices rose rapidly in 2020/21 due to central bank monetary expansion, which moved capital from the traditional fiat banking world to the crypto world.”
Amid the current banking drama, bitcoin cleared above 200 weeks moving average (MA) to take off. However, after a small correction, the price is currently fighting here: at the time of writing, the price is just above $ 25,000.