US banking crisis has boosted Crypto’s long-term outlook: Coinbase
A recent report by David Duong, head of institutional research for the leading US crypto exchange Coinbase, suggests that crypto is the solution to the failure of the existing financial system.
The researcher believed that the recent US banking crisis has made more people see and appreciate the value of having an alternative to the system. In turn, the development has reinforced the long-term outlook for digital assets to the upside.
The banking crisis strengthened the Crypto Outlook
IN report, Duong argued that mismanagement of assets and liabilities and a challenging interest rate environment in the US led to the recent banking crisis. In the last two weeks there have been several American banks turn offwith others struggling with liquidity problems.
“Overall, we believe the medium to long-term outlook for cryptocurrencies has strengthened to the upside. The technology behind open, trustless blockchains and transparent smart contracts stands in stark contrast to the poor risk management practices that led to the turmoil witnessed in the US banking sector this week,” the researcher said.
The banking crisis also extended into European markets, with Credit Suisse, Switzerland’s second-largest bank, now its breaking point. Interestingly, as the turmoil continues, the crypto sector has seen significant growth, which Duong partly attributed to technical reasons.
“For their part, cryptocurrencies have shown some resilience, partly due to technical reasons. But we also believe that more people are now appreciating the fundamental value proposition of having an alternative to points of failure inherent in the traditional financial system,” he added .
Positioning for the next bull run
Furthermore, the Coinbase researcher mentioned that the chaos could lead to the Federal Reserve making monetary policy decisions that affect the financial markets. Although the situation has a wide spread of possible outcomes, crypto businesses can face the challenges of fiat payment rails.
However, he believes that the crypto sector will create sufficient redundancies over time to ensure smooth operations.
Meanwhile, Duong revealed that Coinbase had seen increased institutional crypto purchases in recent weeks. Traditional and crypto-native hedge funds, private wealth entities and traditional asset managers are positioning themselves for the Fed to return the easy monetary policies that fueled the last bullrun.
