The U.S. banking system is showing signs of distress, as financial analysis has revealed that over 2,300 American financial institutions have more liabilities than assets. This dire situation has the potential to drive up the price of Bitcoin in the future, should the government fail to act with caution.

The current administration has not offered a blanket guarantee for all deposits, as the Federal Deposit Insurance Corporation (FDIC) holds only $127 billion in assets and may require its own bailout.

Recent pressure from financial institutions for the US Securities and Exchange Commission (SEC) to crack down on short-sellers is said to protect the banking system and the American people’s faith in public markets. However, any rushed decisions concerning short-selling bans could have a more adverse effect, possibly benefiting crypto and bitcoin prices.

In 2008, the SEC banned short-sellers from almost 1,000 financial stocks in hopes of rebuilding market confidence, but the New York Federal Reserve later found it made little difference. Another study even found that ‘protected’ stocks saw a severe degradation in market quality, price, and volatility.

With the Biden administration’s stance on cryptocurrencies and the existing anxiety over the banking industry, Bitcoin prices may skyrocket in the weeks and months ahead. Should the government handle the situation correctly, they may be able to avoid an even deeper crisis.



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