Silvergate, SBV collapse ‘definitely good’ for Bitcoin, Trezor CEO says
The ongoing crisis of US banks has many positive implications for Bitcoin (BTC), according to an executive at hardware wallet company Trezor.
On March 14, Bitcoin breached $26,000, a price level not seen since June 2022, posting its biggest gains of the year so far. The multi-month high followed a series of shocking events in the US banking industry, with banks such as Silicon Valley Bank (SVB), Silvergate and Signature going out of business.
According to Trezor’s Bitcoin analyst Josef Tetek, the current sharp rise in the Bitcoin price — which is the fastest price increase so far in 2023 — appears to be a direct result of the “apparent fragility of the banking system.”
Tetek said the current banking crisis could potentially make Bitcoin appear as a safe haven and risk-off asset. He emphasized that Bitcoin was created shortly after the world faced the financial crisis in 2008 and was “probably a response to the injustice of bailouts.”
“The current events are a timely reminder of why we need Bitcoin,” Tetek said, adding that current events are not so good for many crypto businesses and assets that are centralized, referring to Circle’s USD Coin (USDC). The analyst stated:
“The current demise of certain banks is definitely good for Bitcoin as such, but not a good environment for custodians of any kind, and once again we reiterate that one of the safest environments is to have self custody.”
According to Tetek, the recent events with Silvergate and SVB clearly show that counterparty risk in the banking system is a “serious problem”, even if it is sometimes well hidden. He added:
“The banks are actually no longer holding our money, but lending it out and buying volatile assets with it. Depositors are actually the banks’ creditors. Understandably, people are looking for alternatives like Bitcoin.”
Tetek also suggested that Silvergate’s collapse was a “direct result of its business relationship” with bankrupt crypto exchange FTX, while SVB’s collapse was a result of “poor risk management.” He further said that SVB had a large exposure to long-term government bonds, which fell in price as a result of the sudden interest rate increases, while the bank failed to have safeguards in place. “SVB had little connection to the crypto industry,” Tetek added.
Related: SVB crisis: Here are the crypto firms refusing exposure to troubled US banks
Tetek’s comments come amid Signature Bank board member and former US congressman Barney Frank arguing that recent US banking events are linked to crypto.
“I think part of what happened was that regulators wanted to send a very strong anti-crypto message,” Frank stated, arguing that problems at Signature were “purely contagion from SVB.”