Right now, Bitcoin is moving on a bullish wave, growing more than 20% since last Friday. The surge is possibly a result of a brand new narrative that is slowly taking shape surrounding the top cryptocurrency by market cap: using BTC to break the bank runs that are currently happening throughout the United States.
Let’s analyze what this could mean for Bitcoin going forward.
Using Bitcoin To Tackle Banking Crises
Last week, reports indicated that Silicon Valley Bank had failed, thus leaving customers unable to withdraw their deposits. It is the second-largest bank failure in US history and was met with widespread panic and an increased risk of bank runs.
A bank run is when customers get worried about the financial stability of the bank and withdraw their funds all at the same time. Since banks usually keep a fraction of customer deposits in hand for withdrawal, if too many people try to access them at once, the bank may be unable to keep up and fail.
The US government was quick to react and launched a plan to restore confidence in the US banking system and make sure that all depositors get fully reimbursed. Nevertheless, the run on banks has now taken a different form: it is creating a bullish narrative for Bitcoin.
Bank runs lead to Bitcoin rallies | BTCUSD on TradingView.com
Uncovering The Crypto Bullish Narrative
Stories and narratives play a critical role in financial markets, with some investors believing that they can be more influential than technicals and financials combined. In 2019, Bitcoin was seen as digital gold and its price rose in tandem with precious metals. In 2020 and 2021, it was dubbed the “fastest horse” in the race against inflation, pushing the crypto market to new all-time highs.
However, the narrative quickly changed to bearish as rates increased and the Fed became hawkish. BTC price dropped by 78%, and the US government went even further by launching an attack on the cryptocurrency industry. Now, the same government is creating a bull run in crypto by once again bailing out banks.
Bitcoin was created in 2009 during the bank bailouts that were happening at the time. The Genesis Block even includes a reference to these events. 14 years later, the cryptocurrency is having its first real test.
Bitcoin was made as a way to allow individuals to become their own banks and to free them from the collateral damage caused by human greed. It seems like the market could be realizing this now, resulting in a buying spree across the crypto space. Can this narrative be strong enough to take BTC to new highs?