Bitcoin Believers Revel in Told-You-So Moment, Big Rally as Banks Crumble
As members of the media lingered near the entrance of the headquarters of Silicon Valley Bank this week, a Bitcoin true believer seized on an opportunity.
He drove a Budget moving van directly in front of the building's entrance, so all could see the message plastered on the side: “BE YOUR OWN BANK,” it read, between a doctored image of Federal Reserve Chair Jerome Powell holding a “Buy Bitcoin” sign and the orange logo for the original cryptocurrency. A video of the made-for-social-media stunt, set to Pink Floyd's “Money” as soundtrack, was tweeted by an account with the handle @cryptograffiti, with text that said “btc>svb.”
Following an epically awful 12 months for the cryptocurrency industry, Bitcoin evangelists are enjoying a moment — not to mention a huge rally in their favorite coin, which has soared more than 30% in the past seven days, putting the key level of $30,000 in sight. To them, the reverberations from the failure of Silicon Valley Bank only serve to underscore a key vulnerability in the fractional-reserve banking system that Bitcoin was meant to fix: It's all based on faith that your money will be there when you need it.
As the original white paper proposing Bitcoin put it in the wake of the global financial crisis, the traditional system works well most of the time yet “it still suffers from the inherent weaknesses of the trust-based model.” That weakness went ignored by many in the era of low interest rates, but it's front and center again now.
“An environment where higher interest rates after a period of hyper-low interest rates are creating bank runs is about as perfect a Bitcoin use-case as one can think,” said Stephane Ouellette, chief executive of FRNT Financial Inc.
It's true that in the wake of last
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