Bitcoin passes a big test

#Web3Weekly: March 12–18, 2023

Peter A. McKay
The Modern Scientist
4 min readMar 19


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Harrowing as the new U.S. banking crisis has been, it has produced one notable winner so far: bitcoin.

The token’s price leapt 30% for the week, even as several more conventional banks floundered. Bitcoin thus handily beat the S&P 500, which managed a small gain overall but was hampered by a 6% drop in its financial sector.

Signature Bank shut down, like Silicon Valley Bank before it. First Republic Bank was bailed out through a $30 billion cash infusion from its peers. And Credit Suisse is on the brink heading into the new week.

Investors’ initial hopes that SVB would be an isolated incident have now evaporated. That’s not to say a new crisis of 2008 proportions is inevitable, mind you. But it’s now clear there is some underlying illness in the system that will take awhile longer to heal.

Satoshi Nakamoto famously documented his idea for bitcoin in the midst of the 2008 crisis, envisioning it as a more stable monetary system immunized against such turmoil in the future.

It has frankly had a mixed record in that regard since, notably failing as an inflation hedge in 2022 as fears of that problem spread. The banking scare of 2023, however, is perhaps providing a measure of redemption.

Clearly, bitcoin is benefiting right now from increased speculation that the Federal Reserve will soon move to an easier interest-rate policy, which would favor bets on riskier assets like stocks and crypto. Some true believers are also probably betting that we’ve moved a step closer to their long hoped-for day when the Bitcoin network may supplant conventional banking altogether.

The week’s other notable headlines:

  • USDC regained its peg to the U.S. dollar, helped by the government’s rescue of SVB’s uninsured depositors. That included USDC issuer Circle, whose CEO nevertheless loudly renewed his criticism of conventional banking. One likely reason he’s in a testy mood: Rival stablecoin Tether’s market vaulation has risen since the SVB meltdown to more than $75 billion, double that of USDC.
  • The Fed’s policy committee will make its next rate announcement Wednesday. For now, Wall Street’s consensus expectation is that the U.S. central bank will raise its target by a quarter percentage point — a slower pace than in recent meetings due to the banking sector’s struggles. Traders have also begun betting the Fed will switch to cutting rates by summer.
  • Podcaster Peter McCormack did an excellent interview about the current crisis with Caitlin Long, who founded a crypto bank after two decades on Wall Street at Salomon Brothers, Credit Suisse and Morgan Stanley. She’s gives a nice plain-English explanation of the issues plaguing the U.S. banking system right now, as well as what she sees as crypto’s advantages. Like many people in the industry, she believes banks should use a business model with fully backed deposits at all times rather than fractional reserve lending.
  • Citing DappRadar data, CoinDesk reports that daily trading volume in non-fungible tokens hit its lowest level since November 2021 after SVB failed.
  • Fidelity Crypto went live, giving millions of the U.S. retirement giant’s customers easier access to crypto markets. The app was previously restricted to a waitlist, with users given access on a rolling basis, according to The Block.
  • State Street announced it is ending a licensing agreement with the crypto custody firm Copper.
  • Remember FTX? A new lawsuit accuses several social media influencers of promoting the failed exchange without proper disclosures.
  • The Ethereum Network’s Shanghai upgrade is now scheduled for April. It will allow users to withdraw staked ether tokens for the first time, Decrypt reports.
  • OpenAI upgraded its ChatGPT application. The new GPT-4 bot is a more sophisticated artificial intelligence, but OpenAI has been unusually secretive about what exactly has changed in the software, according to the MIT Technology Review.
  • Rock on. Shares of tokenized diamonds are surging as investors look for alternative invesments.

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Note: #Web3Weekly content is intended for journalistic purposes only, not as investment advice. Always DYOR and consult appropriate financial professionals before making investment decisions.

Best wishes for a healthy and productive week ahead.



Peter A. McKay
The Modern Scientist

I publish the newsletter #Web3Weekly. Former Head of Content & Writer Development at Capsule Social. Other priors: WSJ, Washington Post, and Vice News.