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Bitcoin Takes Center Stage Amid Credit Suisse Talks

The Swiss bank's credit default swaps, or the cost of insuring the firm's bonds against failure, increased 15% last week. Credit Suisse CEO Ulrich Koerner stated that the firm is preparing for the latest revamp.

03-Oct-2022 By: Shikha Jha
Bitcoin Takes Center

Another Lehman-like event is brewing up in the banking sector, 

With Swiss banking behemoth Credit Suisse currently in a "critical" state. 

Credit Suisse CEO Ulrich Koerner stated that the firm is preparing for the latest revamp and has asked investors for a recovery narrative in less than 100 days.

The Swiss bank's credit default swaps, or the cost of insuring the firm's bonds against failure, increased 15% last week, reaching levels not seen since the Lehman Brothers collapse in 2009.

Along with Credit Suisse, it is suspected that Deutsche Bank is in a similar scenario. These two European banks' total asset base is $2.5 trillion, which is four times the asset base of Lehman Brothers at the time of its collapse.

As we see history repeating itself, global investors are once again turning to Bitcoin as a safe haven. Following the fall of Lehman Brothers, the decentralized cryptocurrency was established to protect investors from international banking institutions and markets.

While the global market was unstable last week, Bitcoin remained unexpectedly stable. At the time of writing, Bitcoin price was trading at $19,136 with a market valuation of $367 billion.

If Credit Suisse follows in the footsteps of Lehman Brothers, it will most certainly provide a significant boost to Bitcoin and cryptocurrency over the following decade.

Bitcoin or Gold?

In response to this recent event, Barry Silbert, founder of Digital Currency Group, Grayscale Investments' parent company, wrote: "Bitcoin is about to become the safe haven asset. There's nowhere else to go.”

Bitcoin critic Peter Schiff reacted quickly, arguing that it would be sensible to purchase gold and sell bitcoin. Where do you hide from The Grayscale Bitcoin Trust, he wrote? It’s down 80%.  Why would Bitcoin suddenly become a safe haven asset if it has never been one before? If you want a proven safe haven, sell your Bitcoin and invest in gold.

However, according to senior commodities strategist Mike McGlone, Bitcoin and Gold can outperform over the next decade based on the present macroeconomic circumstances.

Read also: India freezes more digital currencies, such as Bitcoin and Tether

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