Too big to fail, which could be translated as too big to fail, is an expression used in finance since the 2008 crisis. describes an entity that is too large for its potential bankruptcy not to significantly impact society as a whole. Thus, often public authorities but also other market players work to avoid this scenario even if it seems economically justified. These entities, like the very large banks, thus see the possibility of bankruptcy becoming almost uncertain even in the event of (very) poor management.
Bitcoin superstar
While the excitement is at its height as Bitcoin Spot ETFs are gradually establishing themselves in the landscape, facilitating the adoption of the crypto-asset by very large institutional players (some of which are considered too big to fail) , that BTC seems to play a role of safe haven when the crypto industry is shaken, the question becomes completely legitimate: is bitcoin too big to fail. In other words, has the mother of cryptos become such an important financial asset that it cannot perish, because the biggest players in the market would work together to save it in the event of peril?
Everything suggests that yes
This question came up again with insistence in April 2022, when the economic crisis following the war in Ukraine took hold. The price of the mother of crypto-assets then rose to 45,000 dollars. Of the investors concerned about the turmoil in the economy then chose BTC for shelter. To this is added the manifest resilience of the crypto-asset. Even though it fell to its lowest price following the FTX bankruptcy at the end of last year, its value was still already above $30,000 at the end of June.
Moreover, the different requests for Spot Bictoin ETF from giants Blackrock and ARK Invest (joined by Fidelity, WisdomTree and Valkyrie in particular) will do take a big step in BTC. As a reminder, the latest court decision favorable to Grayscale against the SEC makes the acceptance by the latter of such a fund imminent. As a reminder, Blackrock and ARK Invest, more than $15,000 billion under management. Either a much greater strike force than a Stateusually the decider of who is too big to fail.
This trend has even made influence the financial authorities. The International Monetary Fund (IMF) has thus admitted that the ban on Bitcoin may not be effective in the long term. Even Federal Reserve Chairman Jerome Powell has acknowledged the sustainability of crypto, even as he highlights its volatility.
Be careful though
In this euphoria,a few voices are being raised to remind us that technically, bitcoin still has a chance of collapsing. “Nothing is too big to fail,” says Roy Niederhoffer, a crypto enthusiast and hedge fund manager in New York. It is true that technically bitcoin is not backed by any real asset and could collapse if no one was interested in it for a long time. Even if this seems highly improbable today. Benjamin Cowen, founder and editor-in-chief of Into The Cryptoverse, thinks that BTC will suddenly collapse before the end of the year and create panic among investors.
Source: Institutionalinvestor, Cryptonary
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