‘Catastrophic Scenarios’ – JPMorgan Sees US Banking Crisis Boosting Bitcoin After $300 Billion Ethereum and Crypto Price Surge
BitcoinBTC has rebounded this year, helped by a growing US banking crisis that has cast serious doubt on the Federal Reserve’s ability to contain the situation.
Subscribe now to Forbes’ CryptoAsset & Blockchain Advisor and successfully navigating the roller coaster of bitcoin and crypto market
The price of bitcoin has nearly doubled since falling to $15,000 per bitcoin late last year, climbing along with the price of ethereum and other smaller cryptocurrencies, as traders turn their attention to a looming $31.4 trillion earthquake.
Now, after a prominent tech investor admitted he burned “a million to tell you they’re printing trillions,” JPMorgan analysts have credited the U.S. banking crisis with pushing retail traders toward bitcoin in recent months — a hedge against what they call a “catastrophic scenario.”
It is at the beginning of a bull run that you need updated information the most! Sign up for free now CryptoCodex—A daily newsletter for traders, investors and the crypto-curious that will keep you ahead of the market
“The US banking crisis has boosted demand for gold as a proxy for lower real interest rates as well as a hedge against a ‘catastrophic scenario,'” JPMorgan strategists led by Nikolaos Panigirtzoglou and Mika Inkinen wrote in a note to clients seen by Bloombergadding that while institutional investors piled into gold, retail investors have increased their exposure to bitcoin as a buffer against the growing risk of a US recession this year.
The banking crisis that began with Silicon Valley Bank and crypto-friendly banks Silvergate and Signature earlier this year has since claimed San Francisco’s First Republic and crashed the stock prices of Los Angeles-based PacWest and Arizona’s Western Alliance.
The bank sell-off this week came despite assurances from Federal Reserve Chairman Jerome Powell that the US banking system remained “healthy and robust”, following the Fed’s 10th straight rate hike, pushing rates to 16 years. The Fed’s rapid series of rate hikes has been partly blamed for the banks’ problems.
Register now for CryptoCodex—A free, daily newsletter for the crypto-curious
This week’s rate hike by the Federal Reserve “will continue to add pressure to regional bank balance sheets,” Nauman Sheikh, head of treasury management at bitcoin and crypto investment manager Wave Digital Assets, said in an emailed statement.
“It appears that we are back to macro factors driving the markets. Against this backdrop, we are in a risk-off mode in crypto at the moment,” Sheikh added, pointing to “the continued dominance of bitcoin over ethereum- performance.”
Follow me on Twitter.
