Crypto Market Sees Boost as Banking Networks Falter
by Wieke Beenen
The cryptocurrency market is seeing a surge in popularity as traditional banking networks struggle to keep up with demand. With the recent collapse of Silicon Valley Bank, people are increasingly looking for alternative ways to take control of their money and ensure that it is safe.
Bitcoin, in particular, is outperforming 97.6% of the 500 leading publicly traded companies in the U.S. In fact, since March 10th, the price of bitcoin has risen by 37.06%, beating the year-to-date returns of 488 S&P companies, including FedEx, Apple, and Amazon.
According to Cryptomaniaks.com, a leading crypto education platform, the price of bitcoin has surged from $20,376.32 to $27,929.17 since March 10th. This means that only 12 companies in the S&P 500 have achieved higher than 35% returns this year to date.
The surge in bitcoin’s price comes as many investors turn to stablecoins to move money around in the absence of traditional banking networks. Stablecoins are a type of cryptocurrency whose value is pegged to another asset, usually the U.S. dollar.
JPMorgan reports that stablecoin trading volumes have spiked higher since March 8th, when crypto-friendly bank Silvergate announced its voluntary liquidation and wind down of operations. Tether (USDT) has captured a larger share of the stablecoin market as a result.
The collapse of banking networks like Silvergate, Silicon Valley Bank, and Signature Bank has affected crypto firms in different ways. Crypto companies with diversified banking partners, like some exchanges, were less affected. However, in the longer term, it is vital for the crypto ecosystem to replace the banking networks that have been lost so that fiat currency can be transferred efficiently and securely between market participants, ensuring the stability of the stablecoin universe.
Furthermore, the tougher regulatory stance of the U.S. might drive crypto market participants to banking networks in Europe and Asia.
With the ongoing instability of traditional banking networks and the impressive performance of bitcoin, it is no surprise that more and more people are turning to cryptocurrency as a secure and efficient way to handle their finances.
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