This morning when I got out and went to cash out some crypto money from the ATM so I can have liquidity for this week's spending I thought we were having a bank run here too. People were standing in line at the banks ATMs to withdraw cash and for a moment I thought something happened while I was asleep...
Well, nothing really happened, it was just retirees taking and cashing out their monthly pensions. They usually do that every month on a particular date(I guess it's around the 15th of the month). Luckily we still deal with a lot of cash in this country and that is a good thing cuz cash offers a sort of freedom that digital cash doesn't.
Not all of us were fortunate enough to be able to withdraw funds lately. After the collapse of Silicon Valley bank, long lines have formed outside other banks as people try & withdraw their cash.
Now, I haven't followed the news lately and at the moment of writing this post I don't know if SVB got bailed out or not, although US Treasury Secretary Janet Yellen has ruled out a bailout for Silicon Valley Bank, or if it got bought by anyone(rumors were spread around Elon Musk's potential acquisition), but we sure know the collapse of it has had a huge impact on personal and corporate accounts...
With its collapse so the peg of some of the most renowned stablecoins fell. USDC is one of these. At the moment of writing the post, USDC is "trading" at $0.985 after its dive over the weekend to a bit under $0.90. HBD has accustomed us to such volatility as a stablecoin already, but despite that, it's been quite reliable and lucrative for the ones willing to use the HBD savings feature.
So, if your money is not safe in banks, as it is clear that these can collapse, if stablecoins are not really safe heaven either, especially during bear markets. Then where/how should we store our wealth, especially when a bull season for crypto ends?... Bitcoin? Probably... but BTC is more volatile than stablecoins.
However, if one chooses that, then at least he has the opportunity to choose for self-custody of his BTC which is still an undervalued gift humanity has for storing wealth. Soon that will be taken away for traditional currencies. So, what could be the takeaway for the SVB collapse and its domino effect?
Well, first and foremost never trust banks. Second, don't put too much trust in stablecoins either as these are created based on "fiat currency" principles, and third... Well, it's not actually a takeaway, but it needs to be mentioned... I hope people wake up to "the miracles of fractional reserve banking" and embrace truly decentralized cryptocurrencies.
So, what do we opt for storing wealth, if a volatile crypto is no longer an option and banks are taken out of the equation? Well, HBD could be a good idea. Cuz HBD is not functioning on the same principles as USDC. It is true that holding the $1 peg is not something HBD is a champion at, but at least it is a truly decentralized stablecoin.
Unlike many others in the space.
Another important aspect that we should pay attention to, in the middle of the SVB collapse, is the fact that the bankers might use it as an excuse to push CBDCs into adoption by advertising these as a safer option to the current financial system. Remember that crises are opportunities in disguise and they know it.
Thanks for your attention,
Adrian