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Another day, another bailout, and crypto remains resilient

Credit Suisse’s bailout may have saved the bank, but the lack of confidence in the global banking system remains.

March 16, 2023 - The Switzerland’s central bank will bailout Credit Suisse with a US$54bn loan, preventing the 167 years old bank from a liquidity crisis. This may have saved the Swiss bank, but the lack of confidence in the global banking system remains. As the popular crypto commentator Scott Melker joked on Twitter, “when Swiss banks need bailouts to survive it’s probably a decent time to think about buying Bitcoin”. Indeed, we share the increasing view that the criticism against crypto reveals more about the problems with the status quo system than the challenges of this emerging industry.

Many regulators around the world, but especially in the US, are trying to blame the crypto industry for the current banking crisis. However, some market participants such as Cathie Wood from Ark Invest pointed out that the ongoing crisis wasn’t forced by crypto, given that industry is under heavy scrutiny since FTX’s collapse. Wood added that regulators are using crypto as a scapegoat for their own lapses in oversight of traditional banking. On top of that, some investors are seeing the current anti-crypto environment in the US as a short term problem for the industry, which is already finding crypto-friendly jurisdictions elsewhere. They say that in the long term this may end up being beneficial for crypto with the consolidation of new hubs, while the US loses the opportunity, which we agree with.

Moreover, the current crisis has shown the strength of Bitcoin's essence with many investors seeing the major cryptocurrency as a safe haven for the lack of confidence in a system based on trust. Even among the dollar stablecoins, Tether doubled USDC’s market cap with Circle, the USDC issuer, struggling after relying on SVB to keep a significant part of its reserves. Additionally, during this crisis the number of BTC in self-custody increased, with a surge in Bitcoin total addresses. In our view, the crypto industry will adapt and grow, despite all these headwinds, showing its resilience.

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