US Bank Deposits Totaling $3.37 Trillion Uncovered in Latest Report as Bitcoin Price Skyrockets
In a shocking turn of events, US bank deposits dropped sharply between March 8-15, 2023, as people feared banks would collapse in dominoes.
According to data released by the Federal Reserve, US commercial bank deposits all fell by more than $98 billion in the week following SVB Bank’s bankruptcy. However, there were more than $67 billion in more than 25 of the top banks, demonstrating that clients have moved their funds from regional banks to larger, more reliable banks.
This shift highlights concerns that the government will not be able to support smaller banks, especially without systematic consideration. The behavior also underscores the belief that the big banks will definitely not go bankrupt, creating a modern caste system in the US banking system. People who use banking services with leading banks will be protected while other banks are at extremely high risk.
While the moves of the government and major banks are calming the nerves of all the concerns of the banking crisis, today, many users continue to move their funds away from smaller banks. As a result, banks are offering shocking borrowing rates to prevent them from going bankrupt.
CNN reports that borrowings by small U.S. banks hit their highest level since the turn of the century, with banks borrowing over $669 billion this week. However, analysts believe this is just the bank’s last-ditch effort to move forward.
Meanwhile, Bitcoin has increased by more than 35% over the past two weeks, hitting a high of $28,660 million dollars. This surge in Bitcoin prices has been attributed to US investors buying Bitcoin with two hands, with 47% of BTC purchases coming from US institutional investors, according to Markus Thielin, head of research and strategy at Matrixport. Former Coinbase CTO Balaji Srinivasan also pointed out that investors tend to exit cryptocurrencies that have plummeted in value during times of trouble, and this is where the dollar will fall today.
The contrasting performance of bank deposits and Bitcoin highlights the concerns of clients in the US banking system. While Bitcoin may be seen as a safe haven for some, the risks associated with cryptocurrencies are not to be overlooked. Only time will tell whether clients continue to shift their funds away from smaller banks or choose to embrace Bitcoin as a more reliable investment option.
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