‘Worse than 2008’—Bitcoin and crypto now poised for $540 billion crisis, Ethereum co-founder warns
BitcoinBTC, ethereum and cryptocurrencies have been thrust back into the spotlight this year by the US regional banking crisis that may be about to start.
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The price of bitcoin has almost doubled since hitting lows of around $15,000 per bitcoin late last year, with ethereum, the second-largest cryptocurrency, climbing alongside it – despite co-founder Vitalik Buterin issuing a dire bull run warning .
Now another ethereum founder, Charles Hoskinson, who went on to create ethereum rival cardano, has warned the banking crisis will be worse than the 2008 global financial crisis that led to the creation of bitcoin.
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“In 2008, we had $373 billion in committed assets,” said Hoskinson, who co-founded ethereum with Buterin, Joe Lubin and five others in 2014. Fox Business.
“I think we’re over $540 billion now just in the 2023 crisis. We’re just getting started. That whole business model falls apart when you give it a little push and then you lose these institutions like Silicon Valley Bank and they become so politicized and they become so globalized.”
This week, nearly two months since the collapse of Silicon Valley Bank, regulators seized First Republic BankFRC and sold its assets to JPMorgan, the largest US bank by assets.
“What’s going to happen is that ‘too big to fail’ will only lead to bigger institutions,” Hoskinson said. “We’ve seen this story in 2008. And this is the replay. I don’t think anyone wants to see it.”
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Others, meanwhile, have warned that the banking crisis could spiral out of control if confidence in the system is restored.
“Trust in a financial institution is built over decades and destroyed in days. As each domino falls, the next weakest bank begins to wobble,” Bill Ackman, CEO of New York hedge fund Pershing Square, wrote on Twitter.
“We are running out of time to fix this problem. How many more unnecessary bank failures do we have to see before the FDIC [Federal Deposit Insurance corporation], and our government wakes up? We need a system-wide deposit guarantee regime now.”
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