The collapse of Silvergate, Silicon Valley Bank and Signature has become a popular topic among the crypto community. Still, these financial institutions interacted with crypto-businesses, i.e. allowed them to conduct fiat transactions. Now it is no longer possible to work with them.

According to blockchain enthusiasts, this is a serious problem for the industry. However, there are still players in traditional finance who are willing to interact with blockchain companies. So it will be possible to fix the problem.

What will happen to cryptocurrency due to the collapse of banks

Yesterday, the price of Bitcoin broke above the $26,000 level – the last time the cryptocurrency traded that high was back in June 2022. The rise in BTC was accompanied by a similar local bull run in altcoins, which have yet to produce similar returns.

Tettek believes that the rise in crypto’s price has been a testament to the “fragility of the banking system”. What’s happening now in the traditional financial system could make Bitcoin a real “safe haven in the eyes of investors” – an asset where they would invest first in times of crisis in the economy.


And there are reasons for that. After all, the bitcoin issuance rate is fixed at 6.25 BTC per block, which is released every ten minutes on average. In addition, there is no way for developers to increase this rate or create an additional million coins at will, as it happens with fiat and banks.

Accordingly, the inflation of the first cryptocurrency is not only limited, but also predetermined. The blockchain's reward rate drops by half every 210,000 blocks, or approximately four years. And that's much more attractive than what's happening to banks, which don't report on their activities and can essentially do whatever they want with depositors' money.


As a reminder, the first Bitcoin blockchain was created in January 2009. With that and other trivia in mind, some believe the cryptocurrency was the reaction of its anonymous creator Satoshi Nakamoto to the 2008 global crisis.

This time, the notable growth of the crypto market was a reaction to the new banking cataclysms, Tetec is confident. Here’s his rejoinder, cited by Cointelegraph.

Today’s events are another reminder of why we need Bitcoin. The decline of some banks is certainly good for Bitcoin as such, but is not a positive environment for custodians of any kind. And we reiterate that one of the safest strategies is self-storage of assets.


Self-storage of cryptocurrencies involves using a wallet that itself generates what is known as a cid phrase - a unique combination of 12, 18 or 24 words that allows you to sign transactions and dispose of your own cryptocurrencies. This can be done at any time, without depending on the actions of regulators, officials or bankers.

The most secure among this category of non-custodial wallets are cold hardware wallets. Their peculiarity lies in the signing of transactions outside the internet. This keeps the mentioned sido safe and limits it from possible risks of online hacking.


In other words, what is happening to banks has exposed their true purpose, says the expert. He continues.

Banks no longer store our money, but lend it and buy volatile assets with it. Depositors are essentially creditors of banks. Understandably, people are looking for alternatives such as Bitcoin.

The analyst said Silvergate’s problems were partly a result of its “partnership” with cryptocurrency exchange FTX, which went bankrupt in November 2022. Following the collapse of FTX, Silvergate management tried to assure investors and regulators that the exchange’s impact on the bank’s business was minimal.

However, an investigation by US prosecutors from the Justice Department’s anti-fraud division revealed that the agreements between Silvergate, FTX and Alameda Research may have been far more important to the operations of all three organisations. However, the public does not yet have details of how much of Sam Bachmann-Friede’s crypto empire was linked to the bank.

Bankman-Fried himself is now under house arrest at his parents’ home in Palo Alto. On the eve of his lawyers filed another motion in court to clarify the list of electronic resources that the defendant can use without influencing witnesses at the trial.

The latter, incidentally, was already a concern for the judge, as Sam had previously been banned from using messengers due to his early attempts to contact current and former FTX employees, thus essentially influencing the case.

Signature board member and former US Congressman Barney Frank claims that recent developments in the US banking industry are cryptocurrency-related. Here’s his rejoinder.

I think part of the reason this has happened is because regulators wanted to send a very strong message against the cryptosphere.

Earlier, the US Securities and Exchange Commission (SEC) had banned staking for US customers on the Kraken exchange, and also suspended the issuance of a major BUSD stabelcoin. The fact that the regulator is hostile to digital currencies is clear.


In the long term, we think the weakening of the banking system will really benefit the cryptocurrency industry. Still, Bitcoin, along with other coins, is a very popular phenomenon even outside the blockchain community. However, many have been slow to get involved because of the known volatility of these assets. We can assume that the closure of three major banks during the week will ease criticism of digital currencies and end up creating new fans of them.


What do you think about this? Share your opinion in our cryptochat. There we talk about other important developments from the world of decentralised assets.