In a recent blog post, Nigel Green, CEO of deVere Group, “one of the world’s largest independent international financial consultancies,” discussed the surge in Bitcoin price following the collapse of Silicon Valley Bank and Signature Bank. According to Green, the banking crisis has acted as a catalyst for the world’s largest cryptocurrency, with investors seeking safe haven alternatives.
Nigel Green asserts that Bitcoin’s price experienced a surge of up to 20% in the wake of the second and third-largest bank failures in U.S. history, which led to widespread concern among global investors. He suggests that the collapse of Silicon Valley Bank sparked fears of a contagion effect in the banking system, which, according to some analysts, is being burdened by continuous rate hikes. Green also highlights that Bitcoin exceeded the $26,000 level after the U.S. consumer price index data release, indicating a 6% year-on-year inflation increase.
Green mentioned that Bitcoin has previously demonstrated its safe haven asset traits during periods of economic uncertainty, such as the 2020 pandemic when investors sought alternative assets to protect their wealth. Moreover, the emergency measures announced by the U.S. Treasury and the Federal Reserve have also driven investor interest in alternative currencies.
The deVere Group CEO characterizes the Silicon Valley Bank rescue package as a novel form of quantitative easing (QE), which he claims could lead to an increased dollar supply in circulation. This, in turn, might result in a decreased dollar value relative to other currencies, prompting investors to explore alternatives such as Bitcoin, known for its limited supply. Green suggests that the world may be moving away from a dollar-dominated system due to high debt levels and massive money printing efforts, causing a drop in the dollar’s long-term value.
As investors search for alternatives, cryptocurrencies increasingly compete with traditional currencies, leading to a decline in the dominance of leading international currencies. Green predicts that the Federal Reserve will pause its aggressive rate-hiking agenda due to financial stability risks, which is bullish for Bitcoin. Lower interest rates could lead to increased spending and investment and higher demand for BTC as investors seek alternatives with the potential for greater returns. Thus, the fallout from the recent banking crisis may act as a historical springboard event for the world’s largest cryptocurrency.
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