What's causing the current bullish Bitcoin trend? Here's my theory!

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@unbiasedwriter3 months ago
2 min read

Last week was terrible with the collapse of Silicon Valley Bank, and the trouble and end of Silvergate didn't help us much either. The weekend was even scarier as the extremely popular stable coin USDC lost its peg and along with it fell DAI and several other stable coins. I believe many people got shaky legs as they witnessed all of this.

Honestly, I had a hard time seeing how USDC would fail as I do trust Circle (the company behind it) and it seems safe. But what caused it to lose its peg? It had lots of funds stored in Silicon Valley Bank and as the bank collapsed, they would be unable to reach the funds. This means that they didn't have coverage in Dollar for all USDCs on the market, which would cause trouble immediately if people started to withdraw and sell their USDC.

This caused fear in the entire market, and it caused trouble for DAI as they have lots of their guarantee and funds in USDC. This could have turned into a very ugly spiral.

Luckily, people were promised that their Silicon Valley Bank funds would be safe and Circle also guaranteed that they were able to cover every single USDC to USD. This stopped the downfall, and USDC quickly regained its peg, and DAI is almost there as well.

DALL·E 2023-03-14 14.06.47 - create a realistic painting of a man holding a bitcoin in his hand while watching bitcoin charts on his computer.png

What does this has to do with the current BTC run?

I believe what we have seen the last days is people starting to lose faith in banks. They see that it is dangerous, and that their money isn't safe, even though it is stored in a traditional bank. Is Bitcoin safer? I believe many people actually think so as it is decentralized and if you store it yourself, then it is yours and it will always be yours. Since the entire network is decentralized, no person can stop it, making it able to survive bank runs, exchanges runs, and other similar problems.

Now the remaining question is whether or not the BTC run will last? I hope it will, but I really don't have a clue!