Bank deposits in the United States declined significantly between March 8 and March 15 due to fears of a banking collapse. Bitcoin, on the other hand, has gained 35% in the past two weeks.
Federal Reserve data showed deposits at all US commercial banks fell by $98 billion within that week, but increased by $67 billion for the nation’s top 25 banks. This suggests that customers moved their money from regional banks to banks that are considered too big to fail – a sign of fear of banking collapse.
This behavior also underlines the concern that the government may not support smaller banks, especially if they are not considered systemically important. Gemini co-founder Tyler Winklevoss It has been told The US banking system as a modern-caste system where those banking with the top banks are safe while the rest are exposed to risk.
Banks are borrowing at unprecedented rates
Meanwhile, moves by the government and major banks to calm nerves haven’t completely eased concerns about a potential crisis in the banking system. Many users are still withdrawing funds from smaller banks, causing banks to borrow at alarming rates to keep them from running the bank.
CNN reported that the lending rate by small US banks has reached the highest rate since the turn of the century. According to the report, this week banks took a loan of $ 669.6 billion. But analysts believe this is just an attempt by banks to prepare for any bank run and is not necessarily indicative of an ongoing problem.
US investors pile into bitcoin
A look at bitcoin’s recent rally reveals that US investors played a significant role in the price rise. According to Marcus Thielin, head of research and strategy at Matrixport, “Americans are buying bitcoin with both hands.” Thielen noted that 47% of the purchases that fueled the rise in BTC price came from US institutional players.
Balaji Srinivasan, former CTO of Coinbase, pointed out that investors usually exit from devaluing currencies during crises. According to him, this is where the US dollar currently falls, adding that he expects Bitcoin (BTC) to replace it as the global reserve currency.
During this banking crisis, bitcoin has gained 35% in the past two weeks to $27,944. Many BTC bulls have predicted an imminent collapse of the banking system and the potential for the flagship asset to soar to $1 million.
BeInCrypto has reached out to the company or the person involved in the story for an official statement regarding the recent development, but has yet to hear back.