The cryptocurrency market has seen sharp gains and strong liquidity after the Federal Reserve, U.S. Treasury, and FDIC announced a rescue plan for Silicon Valley Bank customers.
Bitcoin is up 15.13 percent and has traded around $28,000 over the past 24 hours.
The rise pushed Bitcoin’s market capitalization to more than $431.3 billion, accounting for 42.35% of the total digital currency market capitalization.
An article by Freddie Gray in the British magazine The Spectatorto reportFor more than a decade, speculators have been betting on Bitcoin as the currency of the future, and the emergence of the digital currency and its astonishing growth is the best proof of the flaws in the financial system we rely on.
The authors point out that Bitcoin emerged in 2009, after the Great Crash of 2008, as a revolutionary concept to counter the destructive global power of central banks.
He also noted that the currency has “a limited supply that cannot be centrally controlled, so its value cannot be affected by quantitative easing or by morally bankrupt or heavily indebted governments.”
The authors add that Bitcoin is a way for ordinary people to express their dissatisfaction with a financial system that causes the suffering of the poor and invariably eases the burden of the rich, arguing that Bitcoin is just one way to solve the great tragedy of capitalism. plan.
He also pointed out that Bitcoin has been affected by government measures during the epidemic, and its value has risen to record levels as the Federal Reserve and other central banks have injected huge sums of money into the turbulent global economy.
In fact, Bitcoin is not so much a hedge against inflation as it is a bet-the price of Bitcoin hit an all-time high of $6.8 in November 2021.
And when governments of various countries tried to deal with inflation after the epidemic, the price of Bitcoin collapsed instantly. Whenever the Federal Reserve announced a rate hike, the price of Bitcoin would fall. Bitcoin is no longer a store of value, nor is it a Instead of being an exchange mechanism, it becomes an indicator of market volatility.
Factors Driving Bitcoin’s Price Rise
In another article published in the Charlotte Observerto reportIn , author Sarah Hansen said that as the banking crisis intensified, there were many factors that pushed the price of Bitcoin to rise again.
She emphasized that the collapse of three U.S. banks—Silicon Valley Bank, Signature Bank, and the cryptocurrency bank Silvergate—caused shock and fear in global financial markets, but helped restore Bitcoin and many others in a surprising way. The price of digital currency.
Sarah said, “The events of Silicon Valley Bank and other bank failures in the past week have highlighted the power of decentralized currencies that individuals can hold and fully own.” “Many people are beginning to understand and embrace decentralized finance. role of service.”
Bitcoin is a decentralized currency because it is not issued by a single entity such as a country’s central bank, but relies on an underlying technology called a “blockchain.” This technology can build a network, and all transactions will be carried out on the network, and will be recorded and managed by all participants in the network.
Sarah added that the intervention of regulators and financial authorities to guarantee and protect customer deposits at insolvent banks “reminds investors of the structural flaws in the U.S. banking system and what drives the use of Bitcoin,” as Bitcoin Digital currencies are a way for investors to protect themselves from the actions of central banks, as their proponents believe. In particular, quantitative easing and loose monetary policy — policies they argue have weakened the value of the dollar as a fiat currency.
Proponents point to bitcoin’s limited supply as a key advantage that makes it a store of value.
To further clarify this point, the author mentions the existence of financial assets that transmit value, and this is what currencies such as the US dollar mainly do, as well as the existence of financial assets that store and store value, the most famous of which is gold. In every society and in every age, gold has been used as a store of value for property and money. Proponents of Bitcoin refer to the cryptocurrency as “digital gold” and see it as an extremely useful store of value.
