US Banks on the Brink: Implications for Asset-Backed Cryptos and the Global Financial System

The recent news of Silvergate and SVB, two major banks in the United States, facing significant problems has raised concerns of a potential global financial crisis 2.0. The situation has been compounded by rising interest rates, which have left many banks with low-interest bonds that they are unable to sell quickly without incurring a loss.

One of the major concerns is the impact that this could have on the asset-backed crypto market, which has seen significant growth in recent years. Asset-backed cryptos are cryptocurrencies that are backed by tangible assets such as gold, real estate, or other commodities. These tokens are typically seen as a more stable investment than traditional cryptocurrencies because they are tied to real-world assets that have intrinsic value.

However, the recent news of US banks collapsing has raised questions about the stability of these assets. If the banks that back these tokens are facing significant problems, it could lead to a loss of confidence in the asset-backed crypto market, which could cause prices to plummet.

One of the banks that has been particularly hard hit is Silicon Valley Bank (SVB), which provides banking services to many major Silicon Valley companies. The CEO of SVB has urged customers to “stay calm,” but sources have revealed that the CEO sold $3.57 million of SIVB stock in the past two weeks, which has raised concerns that insiders have real concerns despite public statements to the contrary.

If more people start removing funds from banks like SVB, it could lead to a domino effect that causes the actual collapse of the bank. This could have significant ripple effects throughout the financial system and could lead to a widespread loss of confidence in the banking system as a whole.

The impact of a potential collapse of US banks on the asset-backed crypto market would depend on the extent to which these tokens are tied to the banks in question. If the tokens are directly backed by these banks, then the impact could be severe. However, if the tokens are backed by other assets such as gold or real estate, then the impact may be more limited.

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