After Silvergate Bank, Signature Bank, SVB Bank and First Republic Bank, Europe is also contaminated by Credit Suisse. The response from the regulators was not long in coming. And after 2008 crisis, they are not joking. The only watchword, Reassure. The arranged marriage organized by SNB for UBS to buy Credit Suisse is only a decoy to avoid the nationalization which would have given bad press to Swiss financial services. We quickly forget the past of UBS to pass it off as a good student. But wouldn't the new monster change status from too big too fail to too big to be saved?

Banks must change the way of working

The fractional reserve system, which relies on taking additional long-term risks using short-term liquid liabilities, has always been a problem, and the smallest decline in profitable assets or volatile liabilities can make the entire balance sheet collapse. However, decades of prudent banking and risk management tools helped reduce the risk of bank failure. The problem began when "monetary innovators" ignored the risks and invented new ways to make money, leading to the 2008 financial crisis. Blaming greed, bad risk management, or lack of regulation misses the point and that the real issue is the inherent flaws of the fractional reserve system and the financial industry's lack of understanding of money and risk. Market conditions have changed. Banks are now caught in a vice. We are no longer in the 1980s, where only the lack of regulation has produced many excesses and bankruptcies. Between 1988 and 1992, there were more than a thousand bank failures in the US. Today the evils come from elsewhere under doubt: the spiral of easy money. Banks need to review their model. (Borrow at a good price to lend higher. Not sufficient anymore ). The move will no take just a month, it could takes a decade. In this context, corporations can’t depend in full exposure on banking system to manage their day-to-day businesses. Crypto has been built in response of 2008 crisis, no the same origin but the same pain point : a liquidity crisis due to a banking failure. Diversification of banking partners makes sense , but diversification on payment and custody infrastructure even more.

Short term curves and long term curves are widely inverted since july. Market incoherences create troubles for banks. Market inconsistencies weaken the financial system by calling into question the banks' business model. The difference between the last bottom ? Easy money tools.

We are at Paris Blockchain Week. This will be an opportunity to discuss empty the actors who are there to solve the pain points of the traditional financial sector.

Corporate cash investment : Hedging your risk

The recent surge in Bitcoin's price can be attributed to several factors, including its narrative as a store of value, which has returned to prominence despite its past inability to perform that role in practice. The current economic climate, marked by concerns of hyperinflation and economic uncertainty, has led investors to turn to digital assets to protect their wealth.

The correlation between Bitcoin and equities, started in 2020, has been largely influenced by the perception that the crypto industry serves as a risk-on indicator that is closely connected to the economic performance and monetary policies of the US and global markets.

While high-growth equities are expected to suffer if economic conditions continue to deteriorate, the market is looking for Bitcoin to decouple from Big Tech and follow commodities instead. If inflation reaches a double peak, it is likely that most high-performing assets, with the exception of commodities and Bitcoin, will reverse most of their gains for the year.

Overall, the uncertainty surrounding the global economy and concerns about inflation are driving investors towards digital assets such as Bitcoin as a potential safe haven asset.

Microsoft wants its share in web3

Microsoft Edge is reportedly developing a non-custodial wallet for cryptocurrencies and NFTs, as part of its move to join the Web3 movement.

This wallet will allow users to have full control over their funds and keep their password and recovery phrase inaccessible to Microsoft. The wallet will be integrated with Edge what make us think about Metamask. Microsoft aims to attract more users and compete with rivals such as Google's Chrome and Apple's Safari while taking the turn of the Web3 as they measure its impact. However, this decentralized technology goes against the desires of web 2 giants to control and dominate our data. The battle between web 2 and web 3 companies to shape this new technology and its spirit of freedom has already begun.

The Numias Research team

Sources : Beincrypto, Blockworks, Goldman Sachs Research