Medium- and long-term prospects for the cryptocurrency market have “significantly strengthened” following recent upheavals in the U.S. banking sector. is stated in Coinbase’s report.
According to the study, the Federal Reserve’s rate-hiking policy led to declines in Treasury prices, reducing the value of bank portfolios.
The subsequent collapses of Silvergate Bank, Signature Bank and Silicon Valley Bank sparked panic in the financial markets and led to a fall in bank shares, the report said.
“Cryptocurrencies have shown some resilience, partly for technical reasons. … More and more people are now seeking an alternative to the traditional financial system,” wrote Coinbase’s Head of Research David Duong.
The technology underlying blockchains and smart contracts, the company added, “starkly contrasts with the poor risk-management practices that led to the turmoil in the U.S. banking sector”.
However, Coinbase noted that in the short term, the digital-asset-related business could face a “more challenging operating environment” due to the loss of some fiat-payment rails.
Earlier, representatives of the USDC stablecoin co-issuers—Circle and Coinbase—said that problems in the banking sector had led to uncertainty in the crypto market.
Back in March 2023, Colorado Senator Michael Bennet called the friendly stance toward digital assets the cause of Signature Bank’s collapse.