After recent bank collapses, the US banking system outlook was downgraded to “negative”


Recent bank failures have shown the necessity for cryptocurrencies based on the Blockchain, such as Bitcoin.

The outlook of the entire United States banking system has just been lowered from “stable” to “negative” by Moody’s credit rating agency. In response to the recent collapses of Silicon Valley Bank, Silvergate Bank, and Signature Bank, authorities are implementing a rescue plan for affected depositors and institutions.

NBC News noted that bank stocks climbed significantly despite the downgrading, with the SPDR Bank exchange-traded fund surging roughly 6.5% in morning trading. According to Moody, a prolonged period of low-interest rates and fiscal and monetary support in response to the epidemic have impacted bank operations. According to Moody, banks with high unrealized securities losses and non-retail and uninsured U.S. depositors may still be in danger.

The rating agency anticipates that the U.S. economy will enter a recession later this year, placing more strain on the banking sector. With Moody’s recent downgrading, it is evident that conventional banking institutions cannot meet the needs and problems of the modern world. If interest rates increase and the economy enters a recession, it is possible that more banks could collapse, placing more depositors at risk.

Some crypto fans feel that cryptocurrencies, particularly Bitcoin, were developed for such time as the 2008 financial crisis prompted their creation. In reaction to the escalating economic crisis and bank failures, Bitcoin surpassed $26,000, its highest valuation since June.

Bitcoin and other blockchain-based assets offer crypto fans a viable alternative to the failing conventional financial system.

Trezor Bitcoin expert Josef Ttek said in an interview with Cointelegraph that the recent strong surge of Bitcoin looks to be a direct consequence of the “apparent weakness of the banking sector.” 

By offering a more secure, transparent, and efficient financial system, many technology enthusiasts think blockchain-based finance and cryptocurrencies like Bitcoin may play a pivotal role in minimizing the dangers of conventional banking and ensuring that consumers and companies have access to the financial services they need.

Also Read: Circle Struggles to Correct USDC After Signature Bank Collapse

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