Bitcoin defies the trend; will digital currencies steal bank business?

Many investors' attention is still focused on Silicon Valley Bank's bankruptcy and the plummeting share price of First Republic Bank, when another force is rising, with Bitcoin-led digital currencies making a splash in recent days.

Many people are surprised because the United States' banking industry has been plagued by problems one after the other, and in theory, capital bitcoin mining app markets should be relatively devoid of financial assets; after all, digital currencies are part of the financial asset family. However, bitcoin has risen by more than 20% in the last two trading days, particularly after the weekend Silicon Valley Bank and First Republic Bank bearish fermentation. It is critical to understand that, even if the bank fails, depositors are guaranteed a certain amount of deposit; however, if the digital currency bubble bursts, there will be nothing.

However, the financial market in traditional finance and digital currency are two difficult brothers, with a certain correlation but also fierce competition.

If you invest in the financial market, funds will inevitably flow to digital currency to hedge after traditional banks experience problems. Some may wonder why, if you want to hedge, funds do not flow to the manufacturing entity or switch to other markets. Because digital currency has more market attributes, more flexible transactions, and can fully share financial policy, the policy is whether the Federal Reserve will continue antminer a10pro to significantly raise interest rates.

Silicon Valley Bank bursts into flames not because of a systemic risk in its operation, but because of its high interest rate to solicit savings later to invest in US debt, but US debt yields continue to fall due to the Federal Reserve's sharp interest rate hikes, making it difficult for Silicon Valley Bank's investment income to cover interest expenses.

As a result, the market speculates that the Fed's sharp interest rate hikes will end here, as one bank after another fails due to asset-liability maturity mismatch. On Tuesday, Nomura Bank predicted that the Fed would not only not raise interest rates next week, but would actually lower them. Of course, Nomura Securities' expectation is more aggressive, but the Fed will almost certainly reconsider their own interest rate hike policy, which is after all a double-edged sword, because if inflation is not yet under control, their own banks will first fall a large amount.

So, if the Fed does not continue to raise interest rates sharply, market liquidity will be abundant again, and traditional banks must continue to digest the Fed's continuous rate hikes and the subsequent impact of fluctuations in U.S. bond yields, so there is no negative entanglement of digital currency that is understandable.

From another perspective, digital currency will become a future trend, even though the traditional financial industry will develop as well, but digital is an unstoppable trend. Whoever gains a first-mover advantage in digital currency will have a say in the future global financial arena. The central banks of South Korea, Japan, Brazil, and the United Kingdom have all stated that they will pilot digital currencies, and the United States Treasury Department stated in March of this year that the Federal Reserve, the bitcoin earn United States Treasury, and other agencies will hold meetings to discuss central bank digital currencies.

Of course, digital currencies face some emerging issues, the most significant of which are storage and security. Many people are concerned that their digital currency will vanish overnight due to hacking or system vulnerabilities.

As a result, while the application side is important in determining whether digital currencies will grow rapidly in the future, the storage and encryption security of the digital currency itself is also critical. In some ways, digital currency security is more important than traditional bank security because there are no physical safeguards, and a single button can solve many problems while also creating many new ones.

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