US bank deposits fell significantly between March 8th and 15th amid fears of a bank collapse. On the other hand, Bitcoin is up 35% over the past two weeks.
Federal Reserve data showed deposits at all US commercial banks fell $98 billion this week, but rose $67 billion at the country’s 25 largest banks. This suggests customers have been moving their funds from regional banks to banks deemed too big to fail – signaling fears of a bank failure.
US bank deposits (Source: Federal Reserves)
This behavior also underscores the concern that the state might not be able to help the smaller banks, especially if they are not considered to be systemically important. Gemini co-founder Tyler Winklevoss described the US banking system as a modern caste system where people who bank at the top banks are protected while the rest are at risk.
Banks are borrowing at unprecedented interest rates
Meanwhile, attempts by the government and big banks to calm nerves have not fully eased worries about a possible crisis in the banking system. Several users are still moving funds from small banks, prompting banks to borrow at an alarming rate to prevent bank runs.
Smaller Bank Borrowing (Source: Federal Reserves)
CNN reported that small US bank borrowing reached its highest interest rate since the turn of the century. According to the report, banks lent $669.6 billion this week. However, analysts believe this is just an attempt by banks to prepare for a possible bank run and does not necessarily indicate a current problem.
US investors are rushing into bitcoin
A look at Bitcoin’s recent rally showed that US investors had a significant part in the price rise. According to Markus Thielin, Head of Research and Strategy at Matrixport, “Americans are buying Bitcoin with both hands.” Thielen noted that 47% of the purchases that fueled BTC’s price surge came from US institutional players.
US investors fuel BTC rally (Source: Matrixport)
Balaji Srinivasan, Coinbase’s former CTO, pointed out that distressed investors typically exit currency devaluations. In his opinion, the US dollar is currently falling in this direction, adding that he expects Bitcoin (BTC) to replace it as the global reserve currency.
During this banking crisis, Bitcoin has surged 35% to as high as $27,944 in the past two weeks. Several BTC bulls have predicted the impending collapse of the banking system and the possibility of the flagship asset rallying to $1 million.
Disclaimer
BeInCrypto has reached out to companies or individuals involved in the story for an official statement on recent developments, but has yet to receive a response.
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