According to data from the Federal Reserve, deposits at all commercial banks in the United States decreased by $98 billion during that week, but increased by $67 billion at the top 25 banks in the nation. This shows that clients transferred money from neighborhood banks to institutions deemed too big to fail, indicating a fear of a banking crisis.
Additionally, this behavior highlights the worry that the government might not support the smaller banks, particularly if they are not viewed as systemically significant. Tyler Winklevoss, co-founder of Gemini, compared the US banking system to a modern-day caste system in which those who bank with the top institutions are protected while others face hazards.
Nevertheless, efforts by the government and large banks to relieve tensions have not entirely allayed worries about a future banking system disaster. Small banks are still seeing a number of people withdraw money, forcing them to borrow money at alarming rates in order to stop bank runs.
According to CNN, tiny U.S. banks are borrowing at their highest rate since the year 2000. The report claims that this week, the banks borrowed $669.6 billion. Analysts, however, contend that this does not necessarily indicate a current issue and is simply an attempt by the banks to get ready for any bank run.
A closer study at Bitcoin’s most recent price increase revealed that U.S. investors had contributed significantly to the increase. Markus Thielin, the director of research and strategy at Matrixport, claims that “Americans are buying Bitcoin with both hands.” Thielen highlighted that US institutional players made up 47% of the purchases that drove the price surge of Bitcoin.
Former CTO of Coinbase Balaji Srinivasan made the observation that investors typically pull out of depreciating currencies when things are bad. He claims that this is where the U.S. dollar currently stands and that Bitcoin (BTC) will eventually take its place as the world’s reserve currency.
Bitcoin has increased by 35% in the last two weeks during this banking crisis, reaching a high of $27,944. Several BTC bulls have prophesied that the financial system will soon collapse and that the flagship asset might rise to $1 million.