Crypto App Downloads Up 15% as US Banking Crisis Drags On
According to a report from March 17th, the current crisis of confidence in the US banking system led to a marked increase in interest in major digital asset phone apps. At the same time, the use of bank apps has been on a decline in the first week since the closing of the Silicon Valley Bank.
Crypto App Download See a Spike in the Wake of SVB Collapse
A recent report indicated that major cryptocurrency-related apps have seen a major uptick in downloads since the Silicon Valley Bank was closed last Friday. The 15% increase primarily pertains to the applications of major digital asset firms like Binance, Coinbase, KuCoin, and Kraken. Apps of large US banks witnessed a decline in the number of downloads over the same period.
The trend is largely consistent with the way markets have reacted to the closing of three American banks—Silvergate, Signature, and SVB. While the share price of various banks saw a sharp decline this week, albeit mostly constrained to smaller, regional banks, major cryptocurrencies and other digital assets stocks went through a significant—and ongoing—rally.
Bitcoin, for example, rose by some $7,000 since Silvergate announced its liquidation on March 8th. The rally ended a period of decline that started in February after a set of major regulatory actions targeting crypto staking and stablecoins. In total, Bitcoin rose more than 60% since the beginning of the year, and the world’s second-largest cryptocurrency, Ethereum, is up 45% in the same period.
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A Banking Crisis or a Crisis of Confidence?
The rapid closing of three major US banks in less than a week sent shockwaves across the industry. The fact that two of the three affected entities were known for being very crypto-friendly also caused the rise of theories that the federal intervention, particularly when it comes to the Signature bank, was primarily motivated by the desire to send a strong message against digital assets. The speculation was given some credence after one of Signature’s board members, Barney Frank, commented that there was little reason for regulators to step in, but was later denied by New York watchdogs.
Another key feature of the failed banks, particularly Signature and Silicon Valley, was their uncharacteristically high ratio of uninsured deposits. SVB’s percentage was disturbingly high and stood at more than 93%. Signature Bank’s deposits were similarly uninsured with only about 10% being protected. The situation at these two companies led to what some have termed a “crisis of confidence” as Americans suddenly became fearful about the safety of their deposits, particularly those held in regional banks.
This week, the First Republic Bank found itself at the center of the crisis. The bank’s shares fell significantly in Thursday’s pre-market and were halted multiple times throughout the day before closing in the green. The stabilization was, in large part, the result of a $30 billion cash infusion provided as a show of confidence by major US banks like JP Morgan Chase.
The stabilization was, however, short-lived and First Republic’s share price sharply declined on Friday and finally closed more than 30% in the red. Already on Sunday, Federal agencies set up special measures to stabilize American banks, and data from Friday demonstrated that US banks borrowed from it at levels not seen since the crisis of 2008.
Do you think the current crisis in US banking can lead to mainstream crypto adoption? Let us know in the comments below.