Bernstein Private Wealth Manager analysts suggest that the ongoing banking crisis in the United States could boost Bitcoin adoption and potentially raise its price.
Due to the shaky state of traditional finance, analysts recommend investing in Bitcoin, which may soon enter a new bull run.
Besides, analysts Gautam Chhugani and Manas Agrawal argue that the American banking crisis might worsen and that Bitcoin could emerge as a safe haven for investors. They predict that bank failures could drive investors away from traditional finance, leading to mainstream Bitcoin adoption and a new bull run.
Chhugani and Agrawal suggest that weak bank balance sheets could lead to a mass migration to money markets and trigger a new crypto cycle, with digital wallets functioning as on-chain savings accounts.
In March, US authorities closed down Silvergate Capital, Signature Bank, and Silicon Valley Bank due to significant liquidity issues.
Consequently, concerns about contagion in the banking sector escalated after First Republic Bank, which is one of the top 20 largest financial institutions in the US, experienced a staggering 55% drop in share prices. This dramatic decline followed a disappointing Q1 earnings report, further fueling apprehension among investors.
Bernstein analysts anticipate another round of money-printing by the Federal Reserve in an attempt to address the banking crisis. They advise investors to buy Bitcoin, which could reinforce its reputation as digital gold.
Bitcoin’s price has seen significant growth amidst the recent banking crisis, reaching $28,500 shortly after the collapse of Silicon Valley Bank and continuing to rise in the following month.
Historically, Bitcoin had performed well during times of financial turmoil since its creation occurred during the 2008 monetary crisis when many banks failed and needed government intervention for revival.
History of Bitcoin
Bitcoin was conceptualized by an anonymous individual or group known as Satoshi Nakamoto in a 2008 whitepaper. The whitepaper detailed a decentralized, peer-to-peer electronic cash system that aimed to solve the issues of double spending and the need for third-party intermediaries.
The Bitcoin network officially came into existence on January 3, 2009, with the mining of the genesis block, which included a message referencing the financial crisis at the time.
In its early years, Bitcoin gained attention as a digital currency that allowed for pseudonymous transactions, attracting enthusiasts, libertarians, and users on the dark web. The first real-world transaction took place on May 22, 2010, when Laszlo Hanyecz paid 10,000 bitcoins for two pizzas. This day is now celebrated as Bitcoin Pizza Day.
Over time, Bitcoin’s user base expanded, and its value increased, leading to the emergence of other cryptocurrencies and the broader blockchain industry.
Bitcoin has experienced several booms and bust cycles throughout its history, with its price reaching all-time highs and then facing significant corrections. Despite these fluctuations, Bitcoin has gained mainstream recognition and adoption, with large corporations, financial institutions, and even some governments acknowledging its potential as a digital asset, store of value, and alternative to traditional currency.
Is Bitcoin Halal? Can I invest in cryptocurrencies?
As a Muslim investor, it is crucial to determine if cryptocurrency is Halal or Haram. Islamic law lays out specific conditions that must be met for an asset to be considered Halal.
One key aspect is whether cryptocurrencies constitute “Māl,” a term referring to something that can be possessed or stored for future use.
People can trade, exchange, and use cryptocurrencies as a means of payment, making them digital possession.
Islamic finance scholars have differing opinions on the permissibility of cryptocurrencies. Dar Iftaa’, Mesir Fatwa, prohibits cryptocurrencies like Bitcoin due to elements of Jahalah, Gharar, and the potential for illegal activities. In contrast, Datuk Dr. Mohd Daud Bakar, chairman of the Shariah Advisory Council of Malaysia, permits cryptocurrency activities, arguing that Bitcoin’s volatility is not a valid reason for the prohibition.
Shariah Ruling on 3 different types of Cryptocurrencies
Stablecoins are the first type, with their value tied to a fiat currency to reduce volatility. Examples include Tether (USD T) and USD Coin (USDC).
Shariah rulings classify stablecoins as money or a payment system with currency exchange rules applied. The second type, gold or silver-backed tokens, derive their value from commodities. PAX Gold (PAXG) and Tether Gold (XAUT) are examples.
Shariah rulings treat these tokens as money, with currency exchange rules applied. The third type, unstable coins, are not backed by fiat currency or commodities.
Examples are Bitcoin (BTC) and Litecoin (LTC). Shariah rulings consider these as money as well.
Islamic rulings on currency exchange, or Bay’ al sarf, aim to prevent interest-bearing loans (riba) and focus on the proper exchange of money and commodities.
According to the Shariah rules, gold and silver are one of the ribawi items and must be exchanged on the spot with equal amounts, quantity, and quality.
3 Halal Cryptos you must know in 2023
As cryptocurrencies gain popularity, some cater to Muslim investors by obtaining Shariah-certified halal status. The nature of a cryptocurrency determines its halal or haram classification, and these three have met the Shariah-compliant criteria.
Lumen (XLM) uses the Stellar network, enabling digital-to-fiat currency conversion for borderless transactions. It’s certified by the Shariyah Review Bureau (SRB) and approved by Islamic scholars.
OneGramCoin (OGC), backed by physical gold, is energy-efficient due to its Proof of Stake protocol. It’s certified by Al Maali Consulting Group and has won multiple Islamic finance awards.
X8, also certified by SRB, maintains a stable digital currency using a basket of fiat currencies and gold. Its automatic reserve management (ARM) artificial intelligence trades assets to hedge against inflation, ensuring compliance with Islamic principles.
Best Crypto Apps in 2023 for You to start investing in Bitcoin and Other Cryptocurrencies
Choosing the right crypto trading app is crucial for seamless trading with low fees and high security. The top three cryptocurrency apps to consider are eToro, Crypto.com, and Coinbase. Each app offers different features catering to various user needs.
eToro is the best overall app in 2022, providing a safe and low-cost trading platform available on iOS and Android. With a minimum deposit of $10 and free deposits in USD, eToro offers multiple payment options and trades across various markets. Regulated by the SEC and other financial bodies, eToro ensures high security.
Crypto.com is ideal for trading with a debit card, offering a wide range of features such as staking and cryptocurrency payments. Available on both Android and iOS, it supports Visa or MasterCard with a 2.99% fee and offers its coin, CRO, for additional benefits. It caters to both beginner and advanced users.
Coinbase is the best cryptocurrency wallet app for beginners, with a user-friendly interface and step-by-step guidance. It accepts Paypal, Visa, or MasterCard with a 3.99% fee and ensures high security by keeping 98% of client funds in cold storage.
Bottom Line
The ongoing banking crisis in the United States has presented a unique opportunity for Bitcoin and other cryptocurrencies to thrive as alternative investments.
Analysts from Bernstein Private Wealth Manager predict that the crisis may lead to a mass migration to digital currencies, resulting in a new bull run and mainstream adoption.
As the traditional financial system faces instability, investors may turn to Bitcoin as a safe haven, reinforcing its status as digital gold.
With various cryptocurrencies catering to Muslim investors and a range of user-friendly trading apps, now is an opportune time for individuals to consider investing in this emerging digital asset class.
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