Last month, the Federal Deposit Insurance Corporation (FDIC) seized First Republic and sold its $229 billion in assets to JPMorgan Chase.
It’s the second-largest bank failure in U.S. history, taking that dubious title from Silicon Valley Bank, which failed in March.
And it’s the biggest bank collapse since September 2008, when Washington Mutual imploded during the Great Financial Crisis.
We’re not even halfway through the year, and already we’ve seen three of the four largest U.S. bank failures in history (First Republic, Silicon Valley, and Signature).
And the contagion continues to spread…
After the feds seized First Republic, regional banks PacWest and Western Alliance saw their shares slide as much as 75% and 64%, respectively.
Since the banking crisis began in March, we’ve seen a total of $538 billion in deposit outflows from regional banks, according to a report from Bank of America.
The bright side? According to the minutes from the Federal Reserve’s May 2-3 meeting:
Deposit outflows from small and mid-sized banks largely stopped in late March and April. Although equity prices for regional banks fell further over the period, for the vast majority of banks these declines appeared primarily to reflect expectations for lower profitability rather than solvency concerns.
We believe some of the deposit outflow moved to crypto.
That helps explain some of bitcoin’s 50% price surge just a week following the collapse of Silicon Valley Bank and Signature Bank, from $20,000 to $30,000.
Its limited supply and self-custody solutions make it a compelling alternative to inflationary fiat currencies or trusting your capital in supposedly “safe” banks.
While bitcoin has pulled back a bit since the banking crisis… There are two other catalysts I believe will carry it back to new all-time highs and beyond.
Plus, I’ll reveal details about an imminent banking change that could open crypto to a $20 trillion market…
The Halving
The second catalyst for bitcoin is the next halving.
For those who need a refresher, the anonymous programmers behind bitcoin hardwired the halving into bitcoin’s code. It cuts the reward for mining bitcoin transactions on the network in half.
So, like clockwork, halvings are 100% guaranteed to happen.
The first halving was in 2012… the second was in 2016… and the most recent was in 2020.
After every halving, we’ve seen bitcoin rise further…
After the first halving in November 2012, the block reward dropped from 50 bitcoins to 25. And the price went from about $12 to a peak of $1,100 by 2013.
The second halving occurred in July 2016. The block reward went from 25 to 12.5. That sent prices from $650 to a peak of nearly $20,000.
The third halving hit in May 2020. Prices went from $8,500 to over $65,000 at their peak.
While the halving is a bullish catalyst for bitcoin, the second year after a bitcoin halving is always a down year.
-
In 2012, bitcoin had its first halving. Prices soared in 2012 and 2013. But in 2014, bitcoin fell 61% for the year.
-
In 2016, bitcoin had its second halving. Prices rose in 2016 and 2017… and then dropped 73% in 2018.
-
In 2020, bitcoin had its third halving. Prices soared in 2020 and 2021… But in 2022, bitcoin lost 64%.
Each and every time, bitcoin bounced back…
As you can see above, the halving is a huge catalyst for bitcoin. If history is any indicator, the 2024 halving will push bitcoin to new highs and beyond.
There’s one final key trend in place that makes a continuation of the current rally likely…
The Bitcoin Hash Rate Is Growing
One measure of the strength of the bitcoin network is the hash rate. That shows the rising computational power needed to power the network.
Essentially, the hash rate shows the “network effect” of more individuals and institutions moving into bitcoin and other crypto assets.
Even amid the price collapse of BTC during the 2022 Crypto Winter, the network’s hash rate more than tripled from the 2021 lows to over 350 exahashes per second (EH/s).
This explosive growth of usage on the bitcoin network is a strong signal that we’re getting over the worst of last year’s sell-off.
According to Metcalfe’s Law, the bigger the network of users, the greater the value of the network.
Think about Amazon, for example. The network effect triggered enormous growth for the tech giant.
As more people signed up for Amazon’s Prime membership, its share price climbed from around $300 in 2014 to an all-time high of over $3,700 in 2021.
That’s a 12x gain in just a few years.
Bitcoin’s adoption is on the same trajectory as other groundbreaking technologies.
According to former Google engineer Michael Levin, bitcoin’s current adoption rate puts it on track for 1 billion bitcoin users by 2025… about half the time it took the internet to reach the same milestone.
That’s why over the coming years, we expect a single BTC will be worth $500,000.
A New Development That Will Boost Crypto Adoption
As this banking crisis worsens, we believe more people will come into bitcoin…
There’s a new development brewing beneath the surface that’s even more impactful…
And Daily editor Teeka Tiwari believes it’s set to drive crypto user growth to 5 billion by 2030.
Yet as this new development drives crypto firmly into the mainstream, the crypto market will begin a maturing process as we move out of the current bear market.
The market will start to trade more like the stock market… It will become less volatile…
And the days where you can get in on a foundational crypto project that will shape our future for pennies on the dollar… Well, they’ll be gone forever.
On Wednesday, June 7, at 8 p.m. ET, Teeka will explain the details of this new crypto development… as well as a special sub-sector of cryptos that’s springing out of it.
These cryptos are set to lead crypto’s next bull run… handing those who get in now the possibility of securing the biggest gains of any cryptos.
Plus, when you become a VIP attendee for the event, you can claim two bonus reports:
-
BIG T’s SECRET: How to Make an Extra $1.4 Million in the Next Crypto Bull Market.
-
This 33-Cent Pick Will Ride AI and “Crypto’s New Development” to Breathtaking Gains.
Teeka will also grant you access to his VIP “ask me anything” session. All you have to do is click here to register. (Please note we can’t give personal financial advice.)
When bitcoin moves higher, as it’s setting up to do, smaller cryptos can see even bigger bull runs.
So you won’t want to miss Teeka’s latest event showing how to make the best returns in the coming crypto bull market.
Good investing,
Andrew Packer
Analyst, Palm Beach Daily