Topic: How SVB fall going to affect bitcoin, crypto in general? (Read 213 times)
It's like watching a game of Jenga, except instead of blocks, it's banks and instead of screaming kids, it's us nervously checking bitcoin prices.
Stocks are pretty unstable at this moment, but if you do right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are lot of wealth transfer in downtime if you know where to look.
At first Bitcoin reacted negatively, as it declined to $20k, then it reacted positively and reached $26k, as I write this post it fell again to $24.5k. So it's hard to tell were the price will be when this drama is over.
The question is how much of that positive movement can be attributed to Binance reducing their exposure to USD and converting $1 billion worth of BUSD into native crypto. The other question is - what happens when they finish converting? Will we tank or will this trigger an uptrend?
I think it looks like a good thing for us. People first reacted as if it was a bad thing because there could be some crypto money in there, and right now we know that government will cover the deposits so there is nothing wrong just yet.
However, it is also quite important to face the reality that we are dealing with something that will hurt the fiat world a lot. Due to this fact, we are going to have crypto people reacting as if we are dealing with something that will be killing fiat so they will all go into crypto instead. This increases the price of bitcoin and all the other coins as well. Look at the price and look at what it was just last week and you will see the difference.
However, it is also quite important to face the reality that we are dealing with something that will hurt the fiat world a lot. Due to this fact, we are going to have crypto people reacting as if we are dealing with something that will be killing fiat so they will all go into crypto instead. This increases the price of bitcoin and all the other coins as well. Look at the price and look at what it was just last week and you will see the difference.
The customers aren't the issue that I'm concerned of because the FDIC already would have insured up to 250k of deposits to begin with as per their own guarantee. What about the uninsured creditors? Their money is completely gone and there isn't any indication that they'll have remedy with the federal government (not that I think they should). The issue this creates is that there's a lot of companies out there that don't have liquidity who need it.
The FDIC $250k insurance was almost meaningless in this case. According to the Financial Times almost 96% of client deposits were not covered by insurance, as the SVB's client base was dominated by start ups and venture capital backing them.
But as mentioned above, regulators refused the bail-out but, at the same time, promised that customers (of both, SVB and Signature bank) will regain access to their finds.
It's all a confidence game at this point. If people lose confidence and do another bank runs, the financial system could run into much bigger trouble.
I figured the bulk of the funds were from tech start ups/tech companies and that would have been all unsecured. I wasn't that so little was covered.
I suppose that makes the dynamics of a bail out more interesting because the Biden administration has an interest in making sure the economy doesn't prolong into a greater recession than it already is. It was his economy that resulted in federal interest rate hikes after all.
Of course the moral dilemma of bailing out the banking industry after their own bad calls is another story. IMO, no bail outs to the unsecured creditors.
I've been saying it for years:
If you want to exit bitcoin, exit into physical goods and services. If you can't do it for some reason, get cash or store credit via gift cards. Don't exit into a centralized bank, but all of these options are better than exiting into a stable coin. Stable coins have no benefits, unless you're trading and have to pay tax for every transaction.
Everything is better than a stable coin for an average bitcoiner who doesn't care about making a few bucks by peddling bitcoin back and forth every day.
Those who are worried about the future of USDC can stop using it and go back to uisng other options like cash, fiat money, and so on.
Your case has strengthened my reservations regarding secure coins as a cryptocurrency supporter. "Stable coins" are a simple, dangerous alternative to Bitcoin. They're only as useful as their value. They are not decentralized and not as safe as cryptocurrencies, one of their main selling features. The author may go bankrupt or be hacked, leaving you with nowhere to deposit your stable money If you want to exit bitcoin, exit into physical goods and services. If you can't do it for some reason, get cash or store credit via gift cards. Don't exit into a centralized bank, but all of these options are better than exiting into a stable coin. Stable coins have no benefits, unless you're trading and have to pay tax for every transaction.
Everything is better than a stable coin for an average bitcoiner who doesn't care about making a few bucks by peddling bitcoin back and forth every day.
Those who are worried about the future of USDC can stop using it and go back to uisng other options like cash, fiat money, and so on.
The impact on the price of Bitcoin will be indirect, because many exchanges and companies were putting their money in the bankrupt bank, and thus this will lead to a significant lack of liquidity in the market.
Circle (USDC) had $3.3 billion of its reserves stuck in a bankrupt Silicon Valley bank.
Decentralized lending platform BlockFi has $227 million in bankrupt SVB Bank.
Binance announced that it holds 3 billion USDC.
You see it's like a chain linked together, so any accident can affect everyone.
Circle (USDC) had $3.3 billion of its reserves stuck in a bankrupt Silicon Valley bank.
Decentralized lending platform BlockFi has $227 million in bankrupt SVB Bank.
Binance announced that it holds 3 billion USDC.
You see it's like a chain linked together, so any accident can affect everyone.
Some people say it's not gonna affect bitcoin price because the fallen banks were only bitcoin supports. But USDC was also having big stash of cash in these banks.
I am still looking for a clear idea of what it's really gonna be
We just want to say that the reality amid the American banking crisis is that Bitcoin on March 13 to 14 increased dramatically. Even in one day the increase occurred up to 20%. Like yesterday the price was able to break through to a price level that was almost close to $26K.I am still looking for a clear idea of what it's really gonna be
The fall or collapse of Silicon Valley Bank (SVB) is trending among business people in the crypto world. The crisis made several cryptocurrency companies refuse exposure to US banks. As stated by cointelegraph.com that several types of cryptocurrencies that were not influential behind the collapse of Silicon Valley Bank (SVB) such as Tether.
[1]. bitcoinmagazine
[2]. cointelegraph.com
And looks like bitcoin reacted very positively to all this drama.
People look like to be trading usdc for btc.
Also, people are now worried about their bank deposits and investments , and bitcoin is a natural alternative. This might be the reason for this price pump recently
People look like to be trading usdc for btc.
Also, people are now worried about their bank deposits and investments , and bitcoin is a natural alternative. This might be the reason for this price pump recently
The entirety of this space actually reacted very negatively(because of panic, as if bitcoin was stored in banks), then reacted positively after the dust settled("wait, bitcoin makes more sense").
Quite an interesting event, that's for sure.
Those who are worried about the future of USDC can stop using it and go back to uisng other options like cash, fiat money, and so on.
Its simple yet very true
if you guys don't like it just stay away. yeah trading futures is usually using stablecoin but there is centralized exchange that use altcoin as collateral.
and SVB collapse has an impact to crypto even this only small if you notice almost all stablecoin is de-peg from 1$ when SVB collapse. and bitcoin had little shock too.
Some people say it's not gonna affect bitcoin price because the fallen banks were only bitcoin supports. But USDC was also having big stash of cash in these banks.
I am still looking for a clear idea of what it's really gonna be
I am still looking for a clear idea of what it's really gonna be
It's likely to have some sort of effect and there was a short term dip when the news first started to appear. However it's what these banks were actually offering in the background which might be harder to replace. Few "traditional" banks want to go anywhere near cryptocurrency because they've been stung by all sorts of money laundering accusations in the past. Silvergate, more so than SVB, tried to gear up their whole client base around cryptocurrency solutions and it was working in fairness. However they bought a lot of bonds that paid small amounts which means they are much harder to sell when governments are selling new bonds with much higher returns connected to them. Just like the 2008 financial crisis, nobody knows quite if the contagion will spread or where damage will pop up next.
Silicon valley is located in california which is known for having the 5th largest economy in the world by GDP.
SVB's troubles might mean the central pillars of banking, which support the state of california's $3.63 trillion dollar economy are running at higher risk than normal.
It all depends on SVB's demographic numbers. It is known that they handled roughly 50% of all startups in the USA. Which could mean their downtrend is derived mainly by collapse of something resembling another dot com bubble.
Quote
Economy of California
The economy of the State of California is the largest in the United States, with a $3.63 trillion gross state product (GSP) as of 2022.[2] It is the largest sub-national economy in the world. If California were a sovereign nation (2022), it would rank in terms of nominal GDP as the world's fifth largest economy, behind Germany and ahead of India
https://en.wikipedia.org/wiki/Economy_of_California
The economy of the State of California is the largest in the United States, with a $3.63 trillion gross state product (GSP) as of 2022.[2] It is the largest sub-national economy in the world. If California were a sovereign nation (2022), it would rank in terms of nominal GDP as the world's fifth largest economy, behind Germany and ahead of India
https://en.wikipedia.org/wiki/Economy_of_California
SVB's troubles might mean the central pillars of banking, which support the state of california's $3.63 trillion dollar economy are running at higher risk than normal.
It all depends on SVB's demographic numbers. It is known that they handled roughly 50% of all startups in the USA. Which could mean their downtrend is derived mainly by collapse of something resembling another dot com bubble.
At first Bitcoin reacted negatively, as it declined to $20k, then it reacted positively and reached $26k, as I write this post it fell again to $24.5k. So it's hard to tell were the price will be when this drama is over.
I think there are reasons to be concerned, because Bitcoin market is very reliant on banks and centralized exchanges to provide liquidity. So a failure of a bank that has ties to crypto market can not be good. But maybe the narrative "banks are falling, plan B!!!" can push the price upwards to compensate for that. Time will tell which force is stronger.
Bottom line is, now is not the time to panic sell, nothing about Bitcoin is being fundamentally challenged.
I think there are reasons to be concerned, because Bitcoin market is very reliant on banks and centralized exchanges to provide liquidity. So a failure of a bank that has ties to crypto market can not be good. But maybe the narrative "banks are falling, plan B!!!" can push the price upwards to compensate for that. Time will tell which force is stronger.
Bottom line is, now is not the time to panic sell, nothing about Bitcoin is being fundamentally challenged.
The market already reacted the time you made this topic, no? USDC depegged down to approximately $.88 and it has already been back to near $1. What you're seeing right now is pretty much the aftermath already.
And looks like bitcoin reacted very positively to all this drama.
People look like to be trading usdc for btc.
Also, people are now worried about their bank deposits and investments , and bitcoin is a natural alternative. This might be the reason for this price pump recently
The customers aren't the issue that I'm concerned of because the FDIC already would have insured up to 250k of deposits to begin with as per their own guarantee. What about the uninsured creditors? Their money is completely gone and there isn't any indication that they'll have remedy with the federal government (not that I think they should). The issue this creates is that there's a lot of companies out there that don't have liquidity who need it.
The FDIC $250k insurance was almost meaningless in this case. According to the Financial Times almost 96% of client deposits were not covered by insurance, as the SVB's client base was dominated by start ups and venture capital backing them.
But as mentioned above, regulators refused the bail-out but, at the same time, promised that customers (of both, SVB and Signature bank) will regain access to their finds.
It's all a confidence game at this point. If people lose confidence and do another bank runs, the financial system could run into much bigger trouble.
Some people say it's not gonna affect bitcoin price because the fallen banks were only bitcoin supports. But USDC was also having big stash of cash in these banks.
I am still looking for a clear idea of what it's really gonna be
Regulators already promised to bail out customers. So it's not going to affect anything. Except panic sales all over the board that could technically unpeg the coin a lot temporarily. Also there's a problem if enough people cash out fast, because the possible lack of reserves. That would be a bigger problem.I am still looking for a clear idea of what it's really gonna be
https://edition.cnn.com/2023/03/12/investing/svb-customer-bailout/index.html
The customers aren't the issue that I'm concerned of because the FDIC already would have insured up to 250k of deposits to begin with as per their own guarantee. What about the uninsured creditors? Their money is completely gone and there isn't any indication that they'll have remedy with the federal government (not that I think they should). The issue this creates is that there's a lot of companies out there that don't have liquidity who need it.
If the economy's in major stagnation, so is Bitcoin.
The immediate price increase of BTC over the last few days is a response to the banking crisis and people not knowing where to put their funds I'd imagine. But long term the consequences are negative for the overall economy.
The market already reacted the time you made this topic, no? USDC depegged down to approximately $.88 and it has already been back to near $1. What you're seeing right now is pretty much the aftermath already.
The same thing that happened to USDC won’t happen to BTC, because no company issues BTCs or holds collateral reserves in banks.
Some people say it's not gonna affect bitcoin price because the fallen banks were only bitcoin supports. But USDC was also having big stash of cash in these banks.
I am still looking for a clear idea of what it's really gonna be
Regulators already promised to bail out customers. So it's not going to affect anything. Except panic sales all over the board that could technically unpeg the coin a lot temporarily. Also there's a problem if enough people cash out fast, because the possible lack of reserves. That would be a bigger problem.I am still looking for a clear idea of what it's really gonna be
https://edition.cnn.com/2023/03/12/investing/svb-customer-bailout/index.html
I've been saying it for years:
If you want to exit bitcoin, exit into physical goods and services. If you can't do it for some reason, get cash or store credit via gift cards. Don't exit into a centralized bank, but all of these options are better than exiting into a stable coin. Stable coins have no benefits, unless you're trading and have to pay tax for every transaction.
Everything is better than a stable coin for an average bitcoiner who doesn't care about making a few bucks by peddling bitcoin back and forth every day.
Those who are worried about the future of USDC can stop using it and go back to uisng other options like cash, fiat money, and so on.
If you want to exit bitcoin, exit into physical goods and services. If you can't do it for some reason, get cash or store credit via gift cards. Don't exit into a centralized bank, but all of these options are better than exiting into a stable coin. Stable coins have no benefits, unless you're trading and have to pay tax for every transaction.
Everything is better than a stable coin for an average bitcoiner who doesn't care about making a few bucks by peddling bitcoin back and forth every day.
Those who are worried about the future of USDC can stop using it and go back to uisng other options like cash, fiat money, and so on.
Jump to: