Another bailout plan to save the banks: So far so good…?

When Satoshi Nakamoto launched Bitcoin on January 3, 2008, he wrote in the first block what is called the " genesis block", the headline of the English newspaper The Times of the same day. The headline of the article in question is entitled. "Chancellor on brink of second bailout for Banks", which can be translated as "The chancellor on the verge of carrying out a second bailout plan for the banks".

Thus, we can reasonably assume that the creator of Bitcoin did not choose this title at random. Better yet, we can think that he wanted to give us a reference to understand the very existence of Bitcoin. It is in particular thanks to this quote that we can deduce with more or less confidence that the creator of Bitcoin wanted to create a currency different from FIAT and to create ultimately a different monetary system.

In fact, the creation of bitcoin takes place in the very specific context of the 2008 financial crisis.

Thus, the recent bankruptcy of several important banks including the silvergate and Silicon Valley Bank, here again, the newspaper headlines speak of a "bailout plan" to cover losses and put the economy back in order (even if only superficially).

The good old methods have not aged a day since 2008... "Desperate times call for desperate measures"... Should we laugh or cry?

No one seems to know anymore, apart from supporters of bitcoin…

The fall of Silicon Valley Bank, a remake of 2008?

Recently, the financial market was strongly shaken by the bankruptcy Silicon Valley Bank, the second largest bank failure in American history since 2008. After a turbulent weekend where Wall Street feared reliving the global economic crisis of 2008, which was notably precipitated by the spectacular bankruptcy on September 15, 2008 of the one of the oldest American banks, the prestigious Leman Brothers.

The memories are still fresh and the government then decided in extremis of a rescue plan for Silicon Valley Bank. There Fed has decided to put more than 25 billion dollars on the table to stop the bleeding. The response was quick, and it took less than 48 hours to make such a decision. And for good reason, the solution provided is nothing original. This involves repeating the operation which consists of injecting public capital to cover the bank's losses.

It is then, and unsurprisingly, the same solution that was proposed to save Silicon Valley Bank as that which was used to save Leman Brothers...For old problems, good old solutions. Once again, then, but until when?

To Alexandre Counis, in his editorial in The echoes, "The failure of Silicon Valley Bank shows that the mechanisms created after the fall of Lehman Brothers in 2008 are proving ineffective in practice."

In full tension, bitcoin is on the rise again

In the midst of the crisis, the price of bitcoin jumped by more than 20% in the 24 hours following these closures. While Wall Street giants are calling for an imminent bailout to survive, Bitcoin is proving more resilient than ever.

From an investment perspective, Bitcoin shows that it can be de-correlated from markets and function as a safe haven, like gold, over the long term.

However, this is a partial reading of what is happening. There is certainly deeper reading to be done. Indeed, for bitcoin supporters, Bitcoin is much more than a digital currency. Above all, it is a solid and judicious alternative to the traditional banking system. The latter no longer needs to show us that it is unstable. Financial crises and incessant bailouts are indisputable proof of the intrinsic flaws of the system.

The umpteenth bailout plan to save the Silicon Valley Bank may bring to mind the DIY system which consists of putting a piece of adhesive tape on the hole in a pipe which continues to grow…

However, the rise in bitcoin may attenuate and in the long term experience a decline. Remember that today, bitcoin has certainly reached the $24,000 mark but it remains below its ATH of $67,000 reached in November 2021. It is not the price of bitcoin that is to be taken into account here. It is rather its foundations as an alternative to the FIAT currency that must be analyzed. This is indeed where the whole essence of Bitcoin lies.

Has the time come to (finally) consider Bitcoin?

It's been years since bitcoiners and bitcoin maximalists strive to say that Bitcoin is an alternative to the current banking system and that it constitutes a much more solid currency (Sound Money) than fiduciary currencies.

Faced with such episodes of crises, considering Bitcoin as an alternative is becoming ever more realistic. The more the global economic system fails and shows its imperfections, the more relevant Bitcoin becomes. This is called the theoryhyperbitcoinization, developed by researcher Daniel Krawisz within the Satoshi Nakamoto Institute.

However, even if the Bitcoin ecosystem continues to expand and it even becomes legal tender in a few countries like Salvador or the Central African Republic, there is still a long way to go for deeper consideration…

Will it take yet another crisis for theestablishment deigns to consider Bitcoin at its fair “value”?

History will tell us.