Bitcoin sets new record for daily transactions amid banking crisis
It has been a turbulent year for the financial sector, as macroeconomic headwinds led to the 16th largest bank in the US closing its doors in March. An unforeseen upside occurs as decentralized cryptocurrencies make a stunning comeback after a brutal crypto winter last year.
See next: Gamers making thousands selling game skins and assets: Gameflip’s bold vision for the future of game trading
Despite recession risks, people have been investing in riskier alternative assets such as cryptocurrencies as the global banking system appears to be on the brink of collapse. After the historical Silicon Valley Bank bank run, UBS Group announced that it would take over Credit Suisse, Switzerland’s second largest bank. About 186 US banks are at risk of collapse, but the Federal Reserve has been working with the US government to restore stability to the banking sector.
As distressed banks are taken over by multinational financial institutions, investors are shifting towards decentralized finance (DeFi) assets, which appear to be more attractive despite persistent recession warnings. Gameflip, for example, currently floats on StartEngine, a site that allows retail investors to invest in startups. Gameflip has already seen significant traction from retail investors for its 7-figure increase and seen record volume on its site of over $160 million.
First Republic Bank Acquisition and Bitcoin’s Historical Daily Transactions Processed
First Republic Bank‘s brokered acquisition of Fortune 500 banking institution JPMorgan Chase & Co. failed to allay market fears regarding the fragile state of the banking sector. First Republic Bank’s six-week turmoil and eventual collapse marks the second largest bank failure in US history. Three of the five biggest bank failures in US history occurred in 2023, and many economists warn of more pain to come after the May 1 takeover of the distressed bank.
The crypto sector has benefited from banking instability, with Bitcoin records the highest number of daily transactions in 14 years on April 30. About 568,300 Bitcoin transactions were processed on this historic day, about 78,000 higher than the previous record set back during the crypto rally in 2017. What is surprising is the timing of this milestone, as it coincided with the US government in it quietly engineered a bank takeover.
The world’s largest cryptocurrency is up more than 73% year-to-date, making it one of the best-performing assets so far in 2023.
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Traditional banking vs. DeFi
While traditional banks seem to be in shambles, crypto is climbing once again. This juxtaposition of events raises important questions about the future of money and the role of government in financial systems.
Bitcoin, as a decentralized and open source cryptocurrency, has been touted as a solution to the problems of centralized banking and government control. Blockchain technology allows secure and transparent transactions without the need for intermediaries such as banks or public regulators.
The US government’s intervention in the banking system raises questions about the government’s role in maintaining financial stability and protecting consumers from the risks of a failing bank.
The fact that Bitcoin set a new transaction record on the same day as the bank acquisition highlights the potential for cryptocurrencies to disrupt traditional financial systems.
US Watchdog’s Take
The US Securities and Exchange Commission (SEC) has remained surprisingly silent when it comes to establishing an overview to define and regulate alternative digital assets. Regardless, the securities market watchdog has maintained a tough stance on crypto trading platforms.
Popular cryptocurrency exchange platform Coinbase Global filed a petition with the US Court of Appeals for the Third Circuit regarding setting minimum regulatory guidance for US-based crypto companies. Coinbase filed a petition last year with the SEC to create a standard regulatory standard, saying “at a minimum, it must set out how these inappropriate and inappropriate requirements will be aligned with digital assets.”
The future is still uncertain
While a formal regulatory framework regarding the cryptocurrency sector will likely take some time, decentralized assets are still poised to continue their current upward trajectory. Additionally, as the Fed is set to phase out its aggressive hawkish monetary policy by the end of this year, the popularity of riskier crypto assets will take off again.
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This article The Era Of Crypto: Bitcoin Sets New Record For Daily Transactions Amid Banking Crisis originally appeared on Benzinga.com
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