Given the current state of economic instability, the simultaneous failure of Silicon Valley Bank (SBV) and Silvergate Bank has shaken the US financial sector. As a result, some participants in the financial sector predict that things will probably get worse over the next few days.
Robert Kiyosaki, the best-selling author of the personal finance book "Rich Dad Poor Dad," has specifically cautioned that a third lender will probably follow suit. In a tweet on March 10, he emphasized that the circumstance will have a good effect on precious metals.
Kiyosaki asserts that his prognosis is in line with one made in 2008 on the demise of Lehman Brothers. Importantly, the collapse made the financial crisis of 2008 worse, and the event was seen as a turning point. He stated:
“Two Major Banks have crashed. #3 set to go. BUY real gold and silver coins now. No ETFs. When Bank #3 goes gold & silver rocket up. 2008 I forecasted collapse of Lehman days before it crashed on CNN. If you want proof go to RICH DAD.com.”
Future Concerns Regarding Credit Suisse
When rumors about the future of Credit Suisse, another investment bank that supports cryptocurrencies, continue to build, Kiyosaki issues a warning about the impending collapse of a third bank. Following a discussion with the Securities and Exchange Commission (SEC) regarding the lender's cash flow statements for 2019 and 2020, the bank announced a delay in the annual report.
Kiyosaki predicted a more extensive global economic collapse while also warning that bank runs would become more severe during the crisis.
According to economist and crypto-skeptic Peter Schiff, the U.S. banking system is on the cusp of a "far larger collapse" than the 2008 catastrophe. This is because uncertainty is rampant. Schiff issued a warning on March 10 that widespread withdrawals would result in failures. He said:
“The U.S. banking system is on the verge of a much bigger collapse than 2008. Banks own long-term paper at extremely low-interest rates. They can’t compete with short-term Treasuries. Mass withdrawals from depositors seeking higher yields will result in a wave of bank failures.”
Issues In The Banking Industry
The failure of Silvergate Bank, a lender largely dedicated to working with cryptocurrency firms, has raised concerns in the financial industry. The choice was made, according to the bank, "in light of recent industry and regulatory changes."
As a result, the crypto market has collapsed, which has caused a substantial outflow of capital from the industry. The breakdown also caused Bitcoin (BTC) to fall to lows last seen during the bear market of last year.
The 16th-largest lender in America, Silicon Valley Bank, shut down and was taken over by authorities, on the other hand. The bank was also exposed to Silicon Valley businesses, particularly start-ups in technology, and to cryptocurrency businesses.
After Circle, the company that created the USDC stablecoin, disclosed that some of its reserves were kept at SBV, the closure also affected the cryptocurrency market. At the time of publication, USDC was depegged from the dollar and trading at $0.903.