Three banks have crashed and another is on life support, the U.S. banking system is on rocky ground, and fears of a recession are skyrocketing. But one group is thrilled about the current situation: the Bitcoin bros.
The collapse of Silicon Valley Bank this month, along with the smaller Signature and Silvergate banks, was followed by a rally in the price of Bitcoin after a painful year that wiped $2 trillion of value out of the crypto market. Largely silent since the fall of industry darling FTX, the crypto enthusiasts re-emerged on Twitter in recent weeks to boast about their investment—even as others worried about their ability to pay the bills.
The chest-thumping started on March 10, when a massive run on the bank caused SVB to collapse. The bank was a lifeline for many in the tech industry, including small startup founders, who started to panic about not being able to pay their employees or put dinner on the table. Major national economists warned about a contagion that could level still more banks and drag down an already struggling economy.
Some Bitcoin enthusiasts, however, chose that moment to take a victory lap.
“Banks failing. I wonder where I can put my money where I don’t need to trust anyone? Like maybe Bitcoin?” crypto entrepreneur and advocate Dan Held tweeted that day, adding a smirking emoji.
“RT if you trust #Bitcoin more than banks,” Bitcoin Magazine, the host of the annual Bitcoin Conference, tweeted that weekend.
A few days later, the federal government announced it would ensure deposits in the bank, making all SVB customers whole. The move saved thousands from financial ruin but sparked debate over whether yet another bank bailout—even one not funded by U.S. taxpayers—was the right call.
The Bitcoin bros just saw it as an opportunity to post.
“#Bitcoin will never need a #Bailout,” tweeted Michael Saylor. He later retweeted a video clip of crypto podcaster Natalie Brunell’s Fox News appearance, where she declared that “Bitcoin worked this weekend when banks didn’t,” and that the U.S. dollar is “dying by a thousand cuts.”
“This is our time!! Let’s go team $BTC!! Let’s go $ETH!!” tweeted Galaxy Digital CEO Mike Novogratz. “The decentralized revolution is happening.” (Novogratz famously got a tattoo of a different cryptocurrency, Luna, weeks before its value crashed to zero.)
The cheering only grew louder as the price of Bitcoin continued to rise last week. Tyler Winklevoss, the tech entrepreneur whose crypto company, Gemini, is facing charges from the Securities and Exchange Commission, predicted Friday that the price of Bitcoin could reach $30,000 by the end of the weekend.
Former Coinbase chief technology officer Balaji Srinivasan took it even farther, betting a follower on Saturday that Bitcoin would reach $1 million within 90 days. “You buy 1 BTC. I will send $1M USD,” he tweeted. The pseudonymous follower took the bet; he told The Daily Beast via Twitter DM the two sides were just “ironing out the details with a lawyer.”
Joshua White, a finance professor at Vanderbilt University, called these bold predictions nothing more than “hype” meant to drive up the value of Bitcoin. He noted that buying Bitcoin from a crypto exchange like Coinbase or Binance was not inherently safer than investing with banks, because those exchanges could also go bankrupt and lose customers’ money. Users could store their tokens in their own crypto wallets, he added, but that requires a fair amount of technical savvy.
“I can’t imagine the mom and pop running a wine store in Nashville that says, ‘I don’t trust this bank, let me go put this money in Bitcoin,’” he said.
Of the crypto fans predicting a Bitcoin boom, he added: “They also argued that Bitcoin was an inflation hedge, and we did not see that.”
Bitcoin did not cross $30,000 by the end of last weekend, nor did it come anywhere near its historic high of more than $65,000 in 2021. According to crypto investment group CoinShares, people took more money out of digital currencies last week than they put in—for the sixth week in a row. Net outflows were more than $95 million last week alone, with Bitcoin seeing the most sell-offs.
Plus, some industry experts believe the bank failures could actually wind up hurting crypto: Silvergate and Signature were two of the only banks in the U.S. willing to work with crypto companies.
“The impacts would be really big if there is no U.S. bank that will take on deposits from a crypto client,” Taylor Johnson, a co-founder of crypto product company PsyFi, told Time. “It would be very painful, and reduce crypto activity a ton for any U.S. person or business.”
Whether Srinivasan gets his $1 million back remains to be seen.