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Banking Issues, Bitcoin Outperforms

by CryptoDataDownload


SVB & Signature Bank Failures
The failure of Silicon Valley Bank (3/10/23) was a little over a week ago, and has lead to a loss of confidence in the global macro markets. However, Bitcoin significantly outperformed by putting in consecutive +8% days as equity markets faltered. Also notable is that this move occurred following the closure of Signature Bank (3/12/23), which was one of the few banks that permitted buying cryptocurrency. This is surely going to get the attention of portfolio managers everywhere. But what is appealing about Bitcoin in the midst of a possible banking or liquidity issue, given that it is such a volatile asset? Historically, the a portfolio managers' answer would be to "move to cash", ie sell out of your positions and move the money into the bank (or US Treasuries). But what if they don't want to hold the $$ at the bank OR take the risk of holding the position?

The appeal of Self Custody
One of the appeals of the Bitcoin asset is the fungibility and storability. If you can memorize a 12 word phrase, you can keep all of your assets in your head. One logical reason someone may want to own Bitcoin in a possible run-on-the-bank situation is: self-custody. If the bank has all your money and is unable to return it, it was not really your money. Or as the phrase goes in crypto, "Not your keys, not your crypto".



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