EXCLUSIVE: Tether Co-Founder Brock Pierce – Is Bank Failure Letting Crypto Shine? ‘We don’t know yet’

Despite the banking crisis, which included the collapse of Silicon Valley Bank (SVB), Silvergate Bank and Signature Bank, the cryptocurrency market has been resilient, with Bitcoin BTC/USD and Ethereum ETH/USD sees significant gains in early 2023.

The price of Bitcoin on Monday broke above $29,000, trading at levels not seen since June 2022, while Ethereum is trading above $1,890, the highest range since mid-August last year. Cryptocurrency analysts see increasing opportunities for growth and use, especially overseas. However, the outlook for cryptocurrency is nuanced. In the US, meaningful regulation and oversight remains a bumpy work in progress.

The recent banking crisis and regulatory actions have highlighted the importance of stablecoins and their use as a ramp for crypto from fiat. Overall, 2023 is seen as a transitional year for cryptocurrencies, with hopes that the crypto market will turn bullish in 2024.

Interview with Brock Pierce, co-founder of Tether

Billionaire investor, futurist, philanthropist, economist and creator Brock Pierce told Benzinga in an exclusive interview that he believes traditional financial firms are already starting to invest in Web3 projects. This trend will only accelerate if the banking crisis continues.

Normally, traditional financial markets have plunged into crypto, but this could be the beginning of a trend where traditional financial and crypto markets take a distinct path that showcases the unique strengths of decentralized finance.

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BZ: How should the average crypto investor view the bank failures of March 2023?

Pierce: Is it officially time to start panicking? Abandon crypto and everyone starts putting money under mattresses?

I’m not sure what the right answer is, but I’m sure leaving crypto is not the answer. Bitcoin and Ethereum prices are responding positively to the banking crisis, as is gold. I think it’s too early to know for sure what will happen.

BZ: Were the bank failures a “crypto event” or an example of traditional finance failings?

Pierce: I don’t think crypto really had anything to do with this. This was more of a social media and fear based panic, coupled with how the Fed has raised interest rates so many times over the past year and Silicon Valley Bank had five year Treasuries. They should not have held such a long-term assignment. As a result, their bond portfolio is upside down, like the short squeeze on GameStop. They didn’t mark to market the losses they actually incurred, and then combined with panic in the market in a kind of short squeeze event, similar to what we saw with GameStop.

I do not associate this as a crypto-related event, although it has affected some crypto companies. They are not being bailed out with taxpayers’ money. They have assets. They just didn’t have the liquidity. So the government steps in to assist with short-term liquidity, to avoid a major panic. Nevertheless, in the end, it should not be paid for by the taxpayers.

BZ: As one of the founders of Tether, how do you think this will affect stablecoins – or at least USD-backed stablecoins – in 2023?

Pierce: I don’t think this is going to affect the need and popularity of stablecoins. I think stablecoins are going to continue to have more interest. I guess the question here is, does this have any impact Circle USDC/USD? In the long term, it clearly had an impact in the very short term, when people heard that funds were being frozen, which caused the staple to break. But it has been restored. It can have no long-term effect. We are dealing with so many existential threats right now. I mean, I’m in Poland right next to Ukraine, and confidence in the financial system and the banking system is being affected in meaningful ways.

BZ: If traditional finance shows this kind of instability, do we have an opportunity for crypto to shine as a globally distributed solution?

Pierce: The major cryptos are performing very well and gold, in light of everything going on with the banking sector right now. It is one of the few times we have seen this connection. Normally, falls of traditional financial markets have caused crypto to fall. This is one of the first examples we’ve seen of a market crash and crypto performance, which people would always have thought would be the result of financial market turbulence. It has taken turbulence in the banking sector for it to finally become uncorrelated or break out, which is not what we have seen historically. Normally, traditional markets have fallen, causing cryptocurrencies to fall. So maybe this is the beginning of a trend.

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