Silicon Valley Bank's sudden and expedited collapse this week has plunged the crypto market into chaos. Bitcoin, Ethereum and other major cryptocurrencies are expected to see extreme volatility after Circle's $43 billion USDC stablecoin lost its U.S. dollar peg due to its reserves being tied up with the Silicon Valley Bank.
Regulators and Federal Reserve officials are scrambling to prevent the tech startup focused bank's shock implosion from turning into a full-blown financial meltdown in traditional markets. Silicon Valley Bank is a good indication that this wasn't necessarily a crypto specific issue, but rather a case of traditional banks taking on too much risk with their long-duration bonds, which have been hit hardest by FED's rising rates. Now amid the carnage and mayhem, Changpeng "CZ" Zhao, the chief executive crypto exchange Binance, hinted that now could be the time to buy a bank. Then there was news that Tesla billionaire and failed Twitter owner Elon Musk said he's "open to the idea" of buying Silicon Valley Bank.
It's been a really wild week in the world of finance. I thought after the 2008 financial meltdown down we would of figured the system out. However, that does not seem to be the case as regulators have not done much regulating as of late. The policies put inn place have mostly been removed by the last politicians and I get the bad feeling we could be on the precipice of another meltdown that might not only push the world into a recession it might push us into a global depression where only the 1% will fair well and the rest of us will be fighting to survive.
Cheers to some happy Sunday morning thoughts about the financial collapse. Do your best to be prepared by raise cash, reduce debt and position your portfolios for a bumpy ride.