Charles Hoskinson, one of the founders of Ethereum, said that the last banking crisis was “worse than 2008”.
“We saw this story in 2008, I don’t think anyone would want to see it again”
Hoskinson, who founded Ethereum with Buterin, Joe Lubin, and five others in 2014, told Fox Business on May 3, “We had $373 billion in subordinated assets in 2008,” referring to the assets owned by the failing banks of the era.
He continued, implying that the crisis had just begun, “I think we are now over $540 billion in the 2023 crisis. We begin a new. When you push a little, this whole business model falls apart. Then you lose institutions like Silicon Valley Bank. They are very politicized and very globalized”.
The sudden flight of deposits from Silicon Valley Bank and Signature Bank in March forced the Fed to take urgent action. But panic spread to Switzerland’s Credit Suisse, which had to be bailed out by rival UBS. Regulators seized First Republic Bank this week. He sold the bank’s assets to JPMorgan, the largest bank in the United States.
Jamie Dimon, CEO of JPMorgan, which played a key role in the 2008 financial crisis, said, “Our government has invited us and others to step up. We did what was necessary,” he said. According to Wells Fargo, JPMorgan, which currently holds more than 10% of total US bank deposits, will see its net deposits increase by 3% as a result of the deal.
Ethereum founder says larger institutions will struggle
The 2023 banking crisis was triggered in part by the Fed’s series of rapid rate hikes last year. cryptocoin.comAs we reported, this week, interest rates rose to levels not seen since before 2008 in an effort to rein in rising inflation.
Hoskinson said, “Size will lead to the bankruptcy of larger institutions. We saw this story in 2008. Now we see the repetition. “I don’t think anyone would want to watch it,” he says.
First Republic Bank becomes the third bank to fail in two months. Could more follow? https://t.co/RMMQJyqkXl pic.twitter.com/PUIgPzjzN8
— USA TODAY (@USATODAY) May 2, 2023
Meanwhile, other experts warn that the banking crisis could spiral out of control if trust in the system is restored. Bill Ackman, CEO of New York hedge fund Pershing Square, wrote on Twitter, “Trust in a financial institution is built over decades. However, it disappears within days. Every time a domino falls, the next weakest bank starts to shake.”
Bitcoin and Ethereum come into focus
The cryptocurrency market has come into the limelight this year due to the US regional banking crisis. The bankruptcy of Silicon Valley Bank, one of the leading banks in the USA, caused a crisis in the banking sector. However, despite President Biden’s announcement that government support will be provided to banks, the cryptocurrency market continues to appreciate. After the developments in the banking sector, the value of Bitcoin is trading above 29 thousand dollars.
