The narrative of Bitcoin is that it challenges banks.
In reality, this is not quite the case, as many banks are starting to learn to live with bitcoin.
However, at this precise moment in history, the two parables of banks and bitcoin diverge, so much so that they appear to be opposite. This seems more like a random event than something suggesting that bitcoin is actually waging war against banks.
The main problem, for the banks, is that the current moment of economic difficulty inevitably spills over to a financial system that has already experienced crises. The banking sector in particular has been suffering for many years now, and certainly not because of bitcoin.
For example, in Italy there are those who claim that, because of the adverse consequences of the Covid-19 emergency, there is a serious risk of a credit crunch.
Since the beginning of the pandemic, the value of Italian bank bonds has already lost an average of 30%, adding to the heavy losses in the sector in recent years. Should non-performing loans increase significantly as a result of the crisis, banks’ profitability could contract further, causing the value of bank bonds to lose further ground.
As an example, a credit crunch occurred during the 2008 subprime mortgage crisis. In fact, the state has now issued public guarantees to partially cover impaired loans, which could limit the damages.
But this cannot last indefinitely, and if the situation degenerates the credit crunch risk in the coming months or years becomes significant.
In the last 30 days, the FTSE Italia All Share Banks index has lost almost 8%, while bitcoin has grown by almost 23%.
This divergence, however, is random and fluent.
Banks struggling while Bitcoin sets new records
Bitcoin is not only setting new annual price records lately, but also new absolute records in the number of addresses that own BTC.
As the CTO of Glassnode, Rafael Schultze-Kraft, pointed out on Twitter, yesterday there were three historical highs for the number of bitcoin addresses holding BTC worth at least $10, $100 and $1,000. In addition, there are now more than 20,000 addresses holding BTC worth $1 million or more.
In other words, at this moment bitcoin doesn’t seem to be disadvantaged by the Covid-19 emergency, while the banks are, especially in those countries like Italy where their profitability has been in trouble for a long time.