Banking Crisis Sparks Bitcoin Boom: Will it Last?

• The banking crisis in America and Europe has caused fear of another financial crisis.
• Bitcoin and other digital currencies have become a “safe haven” asset for investors looking to protect their wealth.
• Alex Thorn from Galaxy commented that there are supportive macro-economic factors, including tight supply, for bitcoin.

First Republic Bank is Gone

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, raising fears that the 2008 Great Recession may be on its way back.

What Will Happen to BTC?

Alex Thorn – head of firmwide research at Galaxy – commented in a recent interview that it’s unclear whether the banking crisis narrative can continue to be a boon for bitcoin. He noted that Bitcoin accumulation by small addresses is outpacing issuance, creating a supportive supply narrative. Furthermore, he expects a back-of-the-year macro environment characterized by tightening, recession, and an expanding multipolarity in the global economy—all of which can be supportive of gold and bitcoin.

Safe Haven Status

The banking crisis has brought about a new “safe haven” status for bitcoin and many of its digital cronies. As a result, we are seeing currencies like bitcoin rise like they never did the previous year, with more people backing these assets, supporting them, and investing in them as a means of keeping their wealth stable during this present period of financial and economic strife.

Low Base Effect

Thorn continued with: 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 which provided an additional leg up for crypto markets investors alike.

Final Thoughts

It remains uncertain whether or not the banking crisis will benefit bitcoin prices long term; however investors should keep an eye out for potential positive macro-economic catalysts such as increasing Ethereum staking or tight supply issues that could provide support both now and into the future.