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Bitcoin Billionaires Are Back

TheStreet logo TheStreet 3/18/2023 Luc Olinga
© Provided by TheStreet

The most popular cryptocurrency has jumped by 37% in one week, giving voice to its most influential evangelists.

They had been discreet. It was as if they had disappeared. 

The silence of Bitcoin billionaires had become deafening in recent months. When we heard them, it was only to defend themselves from being compared to Sam Bankman-Fried, the former fallen king of the crypto sphere.

The former trader whose net wealth soared to $16 billion before his Nov. 11 downfall, faces 12 criminal counts, including fraud, after cryptocurrency exchange FTX and its sister company Alameda Research went bankrupt. He was the founder of both companies.

Bankman-Fried, 31, is currently under house arrest in California, after his parents posted a $250 million bail. The trial is scheduled for October. Bankman-Fried has pleaded not guilty, despite the fact that three of his lieutenants pleaded guilty to fraud and are cooperating with federal prosecutors. 

The scandal has affected several crypto firms, even causing public clashes between bitcoin evangelists. This was the case between Cameron Winklevoss, the co-founder of the Gemini cryptocurrency exchange and billionaire Barry Silbert, the founder of a crypto empire consisting of Digital Currency Group, which controls Grayscale Investments, a digital-asset-management company that runs a bitcoin trust. 

Big Bitcoin Rebound

These scandals and the fall in cryptocurrency prices since last year had forced Bitcoin evangelists to go quiet. 

But that silence has just ended. It's even a real fanfare awakening that has just happened, thanks to a rebound in Bitcoin prices, while the traditional financial system is shaken by a crisis of confidence in banks, the largest since the financial crisis in 2008.

Bitcoin is currently trading at $27,700, up 37% in the past seven days, according to data firm CoinGecko. Since the outbreak of the banking crisis caused by the sudden collapse of Silicon Valley Bank  (SIVB) - Get Free Report, the prices of the king of cryptocurrencies have even jumped by 41%.

Bitcoin thus pulls the entire cryptocurrency market in its wake. Ether, the No. 2 token by market value, is up 28% to $1,836.18 in the past few days.

"The worse the banks are doing, the better the cryptocurrency is doing," Alex Kuptsikevich, the FxPro senior market analyst, said. "The banking problems in the US and Europe have again highlighted the vulnerability of the traditional financial sector. Once again, investors' fears that keeping money in banks can be risky are coming to the surface."

'This Is Our Time'

In 2022, there was a correlation between Bitcoin and equity markets and especially the tech stocks. Fears of an economic recession prompted investors to flee risk or growth assets. But a divorce has just taken place. 

For Bitcoin billionaires, this is because the digital currency was created in response to a banking crisis. Bitcoin was created in January 2009 in response to taxpayer anger at the federal government, which was bailing out banks with their money, even though it was the practices of those banks that had caused their losses.

In general, Bitcoin fans and cryptocurrency enthusiasts believe that the crisis of confidence in the banking system is an opportunity to extol the merits of digital assets. They highlight the fact that Bitcoin is decentralized, which means that it is not controlled by any authority and everyone can keep their own coins in a personal wallet.

"This is our time!! Let’s go team $BTC!! Let’s go $ETH!!," billionaire Mike Novogratz, CEO of crypto firm Galaxy Digital, said on Mar. 16. "The decentralized revolution is happening."

"BTC" refers to Bitcoin, while "ETH" refers to Ether.

Same story from billionaire Michael Saylor, another crypto evangelist, whose firm is the largest company with Bitcoins in its balance sheet.

"A timely review explaining why #Bitcoin is superior to conventional banks, fiat currencies, staking networks, stable coins, and crypto exchanges; how $BTC helps defend against asset seizures, inflation, fraud, bank failure, and counterparty risk," Saylor said on Mar. 16.

MicroStrategy  (MSTR) - Get Free Report holds 132,500 bitcoins valued at just under $3.666 billion on its balance sheet, according to Bitcoin Treasuries. This portfolio is down about $300 million.

"30k bitcoin by the end of the weekend?" quipped on Mar. 17 Tyler Winklevoss, co-founder of Gemini with his twin brother Cameron.

He added: "The US banking system is a modern-day caste system. There are those who are banked by Bulge bracket banks. There are those who are banked by regional banks. And there are those who are banked by no bank at all."

Winklevoss refers to the extraordinary measures announced by the regulators to avoid the contagion to the rest of the banking system of the fears linked to SVB.


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