This graph clearly shows how the prices of bitcoin and bank shares moved in opposite directions during the recently unfolding banking crisis.
Until recently, bitcoin moved roughly in tandem with the stock market, but a few weeks ago it sharply diverged from it. During the crisis, every time bank stocks fell because there was some new bad news about bank failures or the state of the banking system, the price of the number one cryptocurrency jumped quite a bit. This was the case, for example, on March 13, 17 and 20.
Bitcoin is the antithesis of banks
In the last few days, however, when the situation of several problematic financial institutions seems to be settled thanks to the cooperation of the American and European authorities and competitor banks, bank shares have started to rise slowly. Bitcoin, on the other hand, lost a few percent of its value.
The correlation can be clearly observed: banks are down, bitcoin is up. After all, bitcoin can be called the antithesis of the banking system. But remember that this is only the short-term picture.
The permanent crisis of the banks
In the long term, the upward trend of bitcoin is unbroken, and banks are, according to many, doomed to extinction. At least the classic large, dinosaur-like giant banks, which, in addition to cryptocurrencies, are also being pressured by financial technology (fintech) applications such as Robinhood, Revolut or Wise (and many others).
Major crises in the banking system recur every 10-20 years. Even some conservative economists believe they have a fundamental design flaw. Long-term loans, investments, multi-year mortgage bonds or government securities are financed from short-term assets, namely bank deposits, which can be withdrawn at any time. And this causes tensions with each new and new crisis, often even an epidemic wave of bankruptcies. Banks’ unstable business is either a cause or an aggravator of economic crises.
We are looking forward to an exciting decade.
See also:
Will Deutsche Bank be another victim of the banking crisis?
As a result of the banking crisis, more and more people value cryptocurrencies
The American banking crisis has already reached Europe
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