More than a decade ago, the UK Central Bank decided to bail out its banks by printing more money and infusing capital in failing financial institutions. It was not the only such decision across many nations, but, interestingly, the UK seems to be one of many countries that plan to simply inject money into a balloon that will soon pop. It means that some Central Banks are helping out crypto to gain momentum.
What is happening in the global and UK economies?
Whenever the Central Bank wants to provide bailouts to companies, it has to get money from somewhere. Very often, the printing machine starts working like crazy pushing borrowing to new heights. Currently, the level of borrowing in the UK is similar to what it was close to in 2008 when the financial crisis devastated the world’s economy with countries like the UK and the US contributing a lot to the failure of the banking model that has not changed much since then.
The same is happening in China where multiple real estate developers are about to receive massive bailouts from the government. These measures are short-term solutions and often focus on helping capital holders without ever paying attention to people who need help the most during economic downfalls.
What is interesting is that Bitcoin was developed by Satoshi Nakamoto as the answer to the failing financial system where banks were unnecessary links ballooning the monetary ecosystem and creating many vulnerabilities by facilitating overspending and not keeping enough money to cover their liabilities thanks to the fractional reserve system.
Bitcoin may see more attention from investors
The flagship token of the crypto industry has been performing well and managed to attract more cash flow amidst the global recession. With the British pound falling and Central Banks revealing their inability to handle the situation properly, many people will start hedging against inflation by putting their money into cryptocurrencies.
However, people should remember that many stablecoins are operating much like banks and should be avoided if the plan is to buy BTC and ETH or other valuable tokens.