Bitcoin is 20% up! Discover where this price explosion came from

15 - 03 - 23 Bart

Important events last week

  • There was a bank run on the three major banks in the American (fin)tech sector: Silvergate Bank (SI), Silicon Valley Bank (SVB), and Signature Bank (SBNY).
  • To prevent further damage (domino effect), the American bank intervened and guaranteed to cover all deposits held at the banks. Shareholders, however, lose their investment.
  • As a result of the chaos and uncertainty, several crypto stablecoins de-pegged (temporarily), and the prices of other banks dropped significantly.
  • Bitcoin then rose by more than 20%.

 

Biden's response to the events

Banks vs. Bitcoin

Why did the Bitcoin price surge 20%?

It is always difficult to accurately indicate an increase or decrease in the price. Perhaps the most important point is that the collapse of banks is reminiscent of the banking crisis of 2008. Satoshi Nakamoto created Bitcoin as a response to this, among other things. Bitcoin is scarce, decentralized and you do not have to take a third party risk with a bank.

Also caused the brief collapse of USDC for a lot of chaos and was the easiest and most logical way to quickly exchange it for (the safe) Bitcoin.

So what to expect now?

The US Central Bank (FED) is now in a very difficult position. Recently they have raised interest rates from -0.5% to 4.75% at the time of writing. They do this for the high inflation that has arisen.

With inflation still hovering around 6%, the FED's plan is to continue raising rates.

However, the risk of more banks failing and a bigger crisis now seems so great that raising interest rates by another 0.5 basis points entails a great deal of (systemic) risk. However, persistently high inflation is lurking on the other side. A complicated dilemma!

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