Crypto Assets Acted Like a Safe Haven Amid Bank Runs – Cathie Wood
Cathie Wood, CEO of asset management firm ARK Invest, recently shared her views on the ongoing banking crisis in the United States, stating that cryptocurrencies have acted as a safe haven amid the turmoil.
She blamed the recent downfall of several banks, including Silicon Valley Bank (SVB) and Signature Bank, on the Federal Reserve’s policy failure and suggested that the crisis could have been averted if decentralized crypto solutions had been adopted instead.
Cryptocurrency prices have surged amid the U.S. banking crisis, with Bitcoin and Ethereum reaching new multi-month highs. In a Twitter thread on March 16, Wood criticized the Federal Reserve’s inability to prevent bank runs, despite clear warning signs. She expressed her confusion that banks and regulators could not convince the Fed of imminent disaster. Wood argued that the Fed’s policy was the primary culprit behind the ongoing banking crisis, citing a venture capital funding drought.
Crypto did not force SVB and Signature into bankruptcy. In my view, Fed policy was the primary culprit. Because of a VC funding drought and higher yields on money market funds, deposits left the US banking system.
— Cathie Wood (@CathieDWood) March 16, 2023
She also pointed out the asset-to-liability mismatch that is typical for most banks but is untenable in the current scenario. Deposits were leaving the banking system for the first time since the 1930s, causing securities earnings for banks to be only 1-2% against deposits paying 3-5%. This eventually became unsustainable, and some banks were forced to sell held-to-maturity securities, leading to the recognition of losses that depleted their equity accounts.
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It is worth noting that Wood highlighted the fact that the ongoing crisis was not caused by cryptocurrency. Despite the FTX’s downfall and the subsequent regulatory crackdown, the ecosystem has been under scrutiny. Wood believes regulators are using crypto as a scapegoat for their oversight lapses in traditional banking.
If you are correct, Congressman, then the FDIC and others will prevent the US from participating in the most important phase of the internet revolution. Like you, I believe regulators are using crypto as a scapegoat for their own lapses in oversight of traditional banking. https://t.co/UDh3bwB2pB
— Cathie Wood (@CathieDWood) March 16, 2023
The CEO of Ark Invest has long been a known crypto proponent, as evidenced by her company’s investment in emerging markets, particularly crypto. Wood projects crypto as a solution to the central points of failure, opacity, and regulatory mistakes in the traditional financial system. She believes the current banking crisis would be impossible in the decentralized, transparent, auditable, and over-collateralized crypto asset ecosystem.
As regulators continue to blame crypto for policy mistakes, Wood predicts that crypto will move offshore, depriving the US of one of the most important innovations in history.
Andrey Kunev
Reporter at CoinsPress
Andrey Kunev is a knowledgeable cryptocurrency content creator passionate about the crypto market. With extensive experience in market analysis and investment reporting, Andrey is a valuable asset to the CoinsPress team. As a frequent contributor, he offers insightful and comprehensive coverage of market trends, price fluctuations, and new advancements in cryptocurrency. Whether you're a seasoned investor or just getting started, Andrey's clear and concise writing offers a comprehensive look at the current state of the crypto market and its prospects. Stay up-to-date with CoinsPress's expert analysis and commentary on all things cryptocurrency.
