US Bank Deposits Continue To Fall, What It Means For Bitcoin?

Coingapestaff
May 13, 2023
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US bank deposits

According to Genevieve Roch-Decter, CFA, US bank deposits are about to slip under $17 trillion for the first time in over 2 years. It could be an indicator that people are moving their money from banks to cryptocurrencies such as Bitcoin.

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US Bank Deposits Declines

One potential reason for this trend is the recent spate of bank failures in the United States. In 2023, the major banks – Silicon Valley Bank, Silvergate Bank, Signature Bank, and First Republic Bank – all collapsed, leaving many depositors without access to their funds.

In the case of Silicon Valley Bank, a large portion of the bank’s portfolio was invested in Treasury and mortgage bonds, which lost value when interest rates rose. This led to a panic among depositors, many of whom were tech startup founders, who rushed to withdraw their money from the bank.

Signature Bank and First Republic Bank also failed due to a high percentage of uninsured deposits and a large number of wealthy customers with deposits exceeding the FDIC-insured limit.

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Bank and Bitcoin Rally

The fall in bank deposits can also be influenced by inflation, growing mistrust, and recession. Inflation, for instance, has been a major concern for the US economy, with the pace of price rises reaching 4.9% in the 12 months to April. This is down slightly from 5% in March, but still marks the tenth month in a row that price rises have slowed.

To control inflation, FED has sharply raised interest rates. While this move has helped to slow down price rises to some extent, it has also had an impact on bank deposits. With interest rates rising, people may be seeking alternative investment opportunities that can provide better returns, such as cryptocurrencies.

Bitcoin has often been touted as a potential inflation hedge due to its limited supply and decentralized nature. In times of high inflation, investors may turn to Bitcoin as a store of value. While some investors may see Bitcoin as a potential safe haven asset, others may view it as a highly speculative and risky investment.

 

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
CoinGape comprises an experienced team of native content writers and editors working round the clock to cover news globally and present news as a fact rather than an opinion. CoinGape writers and reporters contributed to this article.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.