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BitcoinBTC, ethereum and cryptocurrencies have been catapulted back into the limelight this year by the U.S. regional banking crisis that could be just getting started.

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The bitcoin price has almost doubled since falling to lows of around $15,000 per bitcoin late last year, with ethereum, the second-largest cryptocurrency, climbing along with itdespite cofounder Vitalik Buterin issuing a serious bull run warning.

Now, another ethereum cofounder, Charles Hoskinson, who went on to create ethereum rival cardano, has warned the banking crisis is going to be worse than the 2008 global financial crisis that led to the creation of bitcoin.

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"In 2008, we had $373 billion in tied-up assets," Hoskinson, who created ethereum along with Buterin, Joe Lubin and five others in 2014, told Fox Business, referring to to the combined $373 billion in assets that failed banks held in 2008.

CardanoADA, which Hoskinson created in 2016, has become the world's seventh-largest cryptocurrency with a market capitalization of $13 billion, compared to bitcoin's $566 billion and ethereum's $232 billion.

"I think were over $540 billion now just in the 2023 crisis. Were just getting started. That whole business model is falling apart when you give it a little bit of a push and then you lose these institutions like Silicon Valley Bank and they get so politicized and they get so globalized."

In March, sudden deposit flight from Silicon Valley Bank and Signature Bank forced the Federal Reserve to step in with emergency measures but panic spread to Switzerland's Credit Suisse, which had to be rescued by rival UBS.

This week, regulators seized First Republic BankFRC and sold its assets to JPMorgan, the largest U.S. bank by assets.

"Our government invited us and others to step up, and we did," said Jamie Dimon, JPMorgan's chief executive, who played a key part in the 2008 financial crisis. JPMorgan, which already held over 10% of total bank deposits in the U.S., will see its net deposits increase by 3% as a result of the deal, according to Wells FargoWFC analysts.

"Whats going to happen is too big to fail is just going to lead to bigger institutions," Hoskinson said. "Weve seen this story in 2008. And this is the rerun. I dont think anybody wants to watch it."

The 2023 banking crisis has been partly triggered by the Fed's rapid series of interest rate hikes over the last year, with rates this week climbing to levels not seen since before 2008 in an attempt to rein in soaring inflation.

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Others have meanwhile warned the banking crisis could balloon out of control if confidence in the system is restored.

"Confidence in a financial institution is built over decades and destroyed in days. As each domino falls, the next weakest bank begins to wobble," Bill Ackman, chief executive of the New York hedge fund Pershing Square, posted to Twitter.

"We are running out of time to fix this problem. How many more unnecessary bank failures do we need to watch before the FDIC [Federal Deposit Insurance corporation], and our government wake up? We need a systemwide deposit guarantee regime now."

I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com.Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies.

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Worse Than 2008Bitcoin And Crypto Now Braced For $540 Billion Crisis, Ethereum Cofounder Warns After Price Boom - Forbes

Bitcoin. Photo by Getty Images

Bitcoin has soared more than 74% to start 2023, but the world's most popular token by market cap could more than double by next year, according to Bob Ras, cofounder of blockchain firm Sologenic.

A key catalyst will be the halving process, which is when the reward for miners is cut in half. It's meant to cut the supply of tokens and historically has sparked price increases.

"When bitcoin's halving kicks in a year from now, we'll likely be well on our way past the previous all-time high," Ras told Insider.

That would mean bitcoin soars past the $67,000 level reached in November 2021, up from about $29,000 on Friday.

Meanwhile, bitcoin appears to be front-running the belief that looser policy from the Federal Reserve is on the way, Ras explained.

The Fed on Wednesday hiked rates for the 10th consecutive time, but Wall Street widely expects that to be the last increase of this tightening cycle.

He thinks the token's rally points to a future that is effectively a return to lower rates and more quantitative easing.

Technical indicators, such as long-term moving averages, suggest upside and momentum, he said, but it's the broader landscape that will determine its performance the rest of the year. And he wouldn't be surprised if bitcoin hits $40,000 by the end of 2023.

"Coupled with signs of slowing [economic] growth, the changing macro picture is pointing towards a Fed that will likely soon have to cut interest rates and inject a lot of liquidity into the market," Ras said. "If the Fed doesn't do this, then we could face a serious contraction, punctuated by a possible credit crunch. Either way, all roads appear to be leading to a loosening of monetary policy sooner rather than later."

Ras isn't alone in his bullishness. Standard Chartered published a recent note that said bitcoin could soar to $100,000by the middle of next year, and Matrixport predicted that bitcoin could more than double to about $65,000 by next April.

As the banking crisis that started with Silicon Valley Bank in March continues to spark contagion fears, more retail and institutional investors have been turning to bitcoin as a hedge, Ras said.

That turmoil re-emerged over the past week as regulators seized First Republic on Monday and sold the bulk of its assets to JPMorgan, triggered sell-offs at regional banks PacWest Bancorp and Western Alliance.

"The banking crisis helped to cement the narrative of bitcoin serving as a key store of value that lacks the sort of counterparty risk of holding funds by way of bank deposits," Ras said. "Bitcoin offers protection by way of decentralization, self-custody and a network that has never been hacked."

But a credit crisis poses the biggest downside risk for bitcoin, he said. In such a scenario, bitcoin as well as gold, another traditional safe-haven investment, could see a sharp decline in value.

"I'm not sure such a scenario would happen," Ras said, "but it's possible and would unleash a tremendous amount of volatility, not only for bitcoin but all markets."

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Bitcoin could more than double and hit a new record high next year - Markets Insider

Bitcoin might be the gold of the future, but for now institutional investors prefer the genuine article.

Bank failures that began in March spurred professional traders to add heavily to their exposure to gold futures even as they pulled back on engaging with crypto, according to a Thursday note by J.P. Morgan analysts.

Bullion is seen as a hedge against potential catastrophe, but since it doesnt pay interest, it is less attractive when rates are high. And while the bank crisis not only makes a broad financial disaster look more plausible, it also increases the likelihood the Federal Reserve could pause hikes or even cut rates.

Bitcoin doesnt have a historical track record, but proponents think it has similar properties, such as a limited supply and low correlation with stocks, that could make it a digital replacement for gold. The tokens price has surged about 44% to $29,387 since regional banks started to teeter in early March.

But when choosing which asset to lean on, big and small investors seem to have diverged, J.P. Morgan said.

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Between March and early May, money managers added heavily to their exposure to gold futures, building a net long position of around $20 billion. Meanwhile, the amount of gold held in exchange-traded funds, a proxy for retail gold interest, rose only slightly.

Investor interest in Bitcoin has gone the opposite direction. Bitcoin futures data analyzed by J.P. Morgan seems to show money managers didnt buy into the tokens even as retail investors drove prices higher.

There are myriad reasons why institutions might be hesitant to seize on Bitcoin as a hedge against catastrophe. For one, Bitcoin has only been around for 14 years and has never faced a severe banking crisis. And while gold prices can be volatile, Bitcoin puts the precious metal to shame. Even with the surge, prices are still down more than 50% from their November 2021 peak.

But more than that, the analysts note, the U.S. is in the midst of a regulatory crackdown on crypto assets with uncertain repercussions for token prices. Regulators have blamed the failures of Silvergate Capital Corp. (ticker: SI) and Signature Bank

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It is hard to see Bitcoin as a shelter from the storm while it is in the sights of Uncle Sam.

Write to Joe Light at joe.light@barrons.com

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Bitcoin or Gold? Big Investors Think It's a No-Brainer. - Barron's

As US banks continue to fail, one would expect Bitcoin (BTC) to skyrocket in value and adoption. However, reality paints a different picture.

This article looks into the complexities of this digital currencys struggle as it grapples with regulatory challenges, environmental criticisms, and burgeoning competition.

Despite a rising tide of anti-bank sentiment, Bitcoins ascent remains stubbornly grounded. As the publics faith in traditional financial institutions wanes, Bitcoin, the original cryptocurrency, should be soaring. However, a confluence of factors, including regulatory uncertainty, environmental concerns, and rival digital currencies, has stymied its progress.

The 2008 financial crisis, followed by numerous banking scandals, has shaken the publics trust in traditional banks. Consequently, many have sought alternative financial solutions, which should have propelled BTC into the mainstream. As a decentralized currency that operates outside the realm of central banks and governments, Bitcoin promised to democratize finance and empower individuals.

Yet, despite its potential, Bitcoin struggles to gain widespread adoption. Regulatory uncertainty continues to create apprehension among potential users and investors. Governments and financial regulators worldwide grapple with the implications of digital currencies, imposing varying degrees of restrictions and guidelines. For example, in the United States, the SECs ongoing deliberations over the classification of cryptocurrencies as securities or commodities create a climate of doubt.

Furthermore, environmental concerns have cast a shadow over Bitcoins promise. The mining process, which requires significant computational power, consumes vast amounts of energy, leading to a substantial carbon footprint.

This has prompted criticism from environmentalists and the broader public, who are increasingly conscious of climate change and its impacts. The University of Cambridge estimates that Bitcoins annual energy consumption exceeds that of countries like Argentina or the Netherlands.

Finally, the rise of rival digital currencies has compounded Bitcoins challenges. As newer cryptocurrencies, such as Ethereum, Solana, and Cardano, gain adoption, each brings unique features and benefits that cater to different user needs. Some offer faster transaction speeds, lower fees, or improved privacy, presenting formidable competition for Bitcoin. These alternatives have fragmented the market, diluting Bitcoins once-dominant position.

As a result, Bitcoins growth remains stagnant despite the increasing disillusionment with traditional financial institutions. Its failure to capitalize on this opportunity can be attributed to the complex interplay of regulatory uncertainty, environmental concerns, and the expanding landscape of digital currencies.

One major factor inhibiting Bitcoins growth is the ever-present shadow of regulatory uncertainty. Governments worldwide grapple with the implications of this decentralized currency, attempting to strike a balance between innovation and security. Consequently, BTCs potential remains mired in a quagmire of doubt, deterring mainstream adoption.

Take China, for instance, where the government has implemented a blanket ban on cryptocurrency transactions. Such a hostile environment curtails Bitcoins expansion, leaving investors and users apprehensive.

Environmental concerns surrounding Bitcoin mining pose another obstacle. The energy-intensive process of validating transactions and securing the network has drawn widespread criticism, with detractors arguing that Bitcoins energy consumption rivals that of entire nations.

This tarnishes the cryptocurrencys image, discouraging potential supporters.

As a result, more eco-friendly alternatives have emerged, such as Ethereums transition to a proof-of-stake consensus mechanism, which significantly reduces energy usage. In this green-conscious world, Bitcoins environmentally unfriendly mining process puts it at a disadvantage.

As the pioneer of decentralized digital currencies, Bitcoin still reigns supreme. However, the advent of numerous alternative cryptocurrencies, each boasting distinct advantages and features, has diluted Bitcoins dominance. From privacy-focused Monero to the fast, low-cost transactions of Litecoin, these rivals chip away at Bitcoins market share.

The proliferation of decentralized finance (DeFi) projects, built primarily on Ethereums blockchain, further erodes Bitcoins stronghold. These innovative platforms offer financial services without intermediaries, addressing some of the very concerns that fueled anti-bank sentiment in the first place.

Despite these setbacks, Bitcoin is far from doomed. Several factors could propel its growth, thrusting it back into the limelight. For instance, the ongoing development of the Lightning Network promises to improve Bitcoins scalability, facilitating faster and cheaper transactions. This enhancement could rekindle enthusiasm for digital currency.

Moreover, as central banks explore the issuance of digital currencies (CBDCs), public interest in cryptocurrencies could surge. Bitcoin, as the most recognizable name in the space, may benefit from this heightened attention.

Finally, the institutional adoption of cryptocurrencies as a store of value or hedge against inflation could lend credibility to Bitcoin. As more companies MicroStrategy add Bitcoin to their balance sheets, the cryptocurrencys reputation may improve, spurring further investment.

The current state of BTC raises a crucial question: if not now, when? Will the cryptocurrency ever reach the dizzying heights of a $1 million valuation by 2023s end, as some predict? While the path remains uncertain, Bitcoins future hinges on its ability to overcome the challenges it faces today.

To succeed, Bitcoin must navigate the murky waters of regulatory uncertainty, adapt to a more environmentally conscious world, and outmaneuver its competitors. Only then can it capitalize on anti-bank sentiment and secure its position as a viable alternative to traditional finance.

Following the Trust Project guidelines, this feature article presents opinions and perspectives from industry experts or individuals. BeInCrypto is dedicated to transparent reporting, but the views expressed in this article do not necessarily reflect those of BeInCrypto or its staff. Readers should verify information independently and consult with a professional before making decisions based on this content.

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Bitcoin Falters Amid Anti-Bank Sentiment: Why? - BeInCrypto

The United States banking system is in trouble as over 2,300 financial institutions could have more liabilities than assets, recent analysis reveals. Subsequently, analysts say this could boost Bitcoin prices in the weeks and months ahead if the government doesnt proceed carefully.

The US Treasury and Federal Reserve say that the problems are peculiar to just individual banks, but experts are warning that the situation is much worse than the government admits.

With the anti-inflationary measures in place, almost half of Americas 4,800 banks are burning through their capital buffers, and there is still more tightening to come from the Fed.

The full effect of monetary tightening by the Fed has yet to hit the economy, and only then would experts know whether the United States financial system will be able to safely deflate the excess leverage induced by extreme monetary stimulus during the pandemic between 2020 to 2021.

The White House did not offer a blanket guarantee for all deposits because that would look like social welfare for the rich. Besides, the Federal Deposit Insurance Corporation (FDIC) reportedly has only $127 billion of assets and may require its own bailout.

For that reason, financial institutions are now pressuring the United States Securities and Exchange Commission to crack down on short-selling strategies that profit when bank stocks slide.

Lindsey Johnson, CEO of the Consumer Bankers Association, urged policymakers to take a serious look at the financial havoc wreaked by short-sellers.

The turmoil in the banking industry is a concern for the Biden administration. If thousands of banks in the United States were to fail, it is possible that some investors could turn to Bitcoin as a way to protect their assets.

With the Biden administrations stance on cryptocurrencies, any action that places the banking system in jeopardy could drive Bitcoin prices higher, even above $40,000.

The SEC is not currently contemplating any ban on short-selling bank stocks, according to a senior agency official.

In 2008, the SEC called time-out on short-selling on nearly 1,000 financial stocks in a bid to restore faith in public markets. However, the New York Fed later found that the ban did little to stem the financial stock market that was flaying out of control.

Another study discovered that most of the stocks protected by the ban lost the citizens confidence, suffering a severe degradation in market quality, price impact, and volatility.

As financial institutions press the SEC to take action against short-sellers, and their role in the market, which is impacting Americans confidence in the financial system. Yet, any careless moves to pull the pin could create more fissures, possibly buoying crypto and bitcoin prices.

Feature Image From Canva, Chart From TradingView

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If Over 2,300 Banks In America Are Bankrupt, Will Bitcoin Break Above $40,000? - NewsBTC