Benzinga - Despite the banking crisis, which included the collapse of Bank of Silicon Valley (SVB), Silvergate Bank and Signature Bank, the cryptocurrency market has been resilient, with Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) registering significant gains in early 2023.
Bitcoin price surged above $29,000 on Monday, trading at levels not seen since June 2022, while Ethereum is trading above $1,890, its highest range since mid-August. last year. Cryptocurrency analysts see growing opportunities for growth and usage, especially overseas. However, the outlook for cryptocurrency is nuanced. In the United States, meaningful regulation and oversight is still a bumpy work in progress.
The recent banking crisis and regulatory actions have highlighted the importance of stablecoins and their use as an on-ramp to fiat crypto. Overall, 2023 is seen as a transition year for cryptocurrencies, with the expectation that the crypto market will turn bullish in 2024.
Interview with Brock Pierce, co-founder of Tether
Billionaire investor, futurist, philanthropist, economist and creator Peter Pierce told Benzinga in an exclusive interview that he thinks traditional finance companies are already starting to invest in Web3 projects. This trend will only accelerate if the banking crisis continues.
Normally, the fall of traditional financial markets has led to the fall of crypto, but this could be the start of a trend in which traditional finance and crypto markets are taking a separate path that shows the unique strengths of finance. decentralized.
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BZ: How should the average crypto investor view the March 2023 bank failures?
Pierce: Is it officially time to panic? Give up crypto and everyone starts putting money under the mattresses?
I don't know what the correct answer is, but I'm sure giving up crypto isn't the answer. Bitcoin and Ethereum prices are reacting positively to the banking crisis, just like gold. I think it's too early to know for sure what's going to happen.
BZ: Were the bank failures a “crypto event” or an example of the shortcomings of traditional finance?
Pierce: I don't think crypto really has anything to do with it. It was more of a panic based on social media and fear, combined with the way the Fed raised interest rates so many times over the last year, and Silicon Valley Bank had five-year treasury bills. They shouldn't have held such a long-term paper. As a result, their bond portfolio is upside down, like the GameStop short squeeze. They weren't marking in the market the losses they had actually suffered, then combined with the panic in the market in a sort of short squeeze event, similar to what we saw with GameStop.
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I don't associate this with a crypto-related event, although it did affect some crypto companies. They are not being bailed out with taxpayers' money. They have strengths. They just didn't have the cash. The government is therefore stepping in to help with short-term liquidity, to prevent further panic. Yet this will ultimately not be paid for by the taxpayers.
BZ: As one of the founders of Tether, how do you think this will affect stablecoins – or at least USD-backed stablecoins – in 2023?
Pierce: I don't think this will impact the need and popularity of stablecoins. I think stablecoins will continue to have more interest. I guess the question here is, does this have any impact on Circle (CRYPTO:USDC)? In the long term, it clearly had an impact in the very short term, when people heard that the funds were frozen, which broke the anchor. But it's recovered. This may not have a long term impact. We face so many existential threats right now. I mean, I'm in Poland right next to Ukraine, and confidence in the financial and banking system is affected significantly.
BZ: If traditional finance exhibits this type of instability, do we have an opportunity for crypto to shine as a globally distributed solution?
Pierce: Big cryptos are doing very well, and so is gold, in light of everything that's going on in the banking industry right now. This is one of the few times we have seen this correlation. Normally, the fall of traditional financial markets led to the fall of crypto. This is one of the first examples we have seen of a market crash and crypto performance, which people would always have thought was the result of financial market turmoil. It took turmoil in the banking sector for it to finally become uncorrelated or breakout, which is not what we have seen historically. Normally, the fall of traditional markets led to the fall of crypto. So maybe this is the start of a trend.
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