Robert Steinadler, 2 months ago

Tim Draper: Billionaire urges businesses to hedge banking crisis with Bitcoin

Tim Draper is well-known for his conviction about Bitcoin. The billionaire bought 30,000 BTC in 2014 during the Silk Road Bitcoin auction. An investment that turned out to be fruitful, to say the least. Because of his conviction, Draper is more than biased when it comes down to the mother of all cryptocurrencies. On the other hand, his success can be interpreted as an indicator that Draper might know a thing or two that other investors don’t. Recently, Draper advised on how business owners and managers should deal with the banking crisis.

How much Bitcoin should your business own in case of emergency according to Tim Draper?

Bitcoin as a hedge against failing banks

Draper urged business owners and managers to have a contingency plan in these uncertain times. He advised businesses to have at least 6 months of short-term cash in a local and an international bank account. Draper also emphasized the importance of having at least two payrolls worth of Bitcoin in the company’s wallet.

According to the paper that he published on Friday, businesses should focus on diversifying and decentralizing as much as they can. Draper wrote this 7-point list of advice in response to the U.S. banking crisis that started with Silicon Valley Bank. Today, the news broke that SVB will be bought by First Citizens BancShares. This is a huge relief for the market but not for depositors and businesses. They still have to ask themselves whether their bank accounts are reliable or not.

This is not the first time that Bitcoin is being discussed as a hedge. Many analysts believe that Bitcoin is an effective hedge against inflation. Interestingly enough, Bitcoin was invented in response to the banking crisis in 2008.

Is Deutsche Bank the next Credit Suisse?

Right now, everybody is looking at Deutsche Bank in Germany. The credit default swaps for Deutsche Bank skyrocketed last week. This means that the bank has to pay way more money to insure its risks and this is the same picture we have seen before Credit Suisse failed.

Chancellor Olaf Scholz assured the public last weekend in Brussels that Deutsche Bank is perfectly safe and that European Banks in general have adjusted their business models accordingly. The problem that resides is that nobody can be certain of how much unrealized losses are on the balance sheet of any bank at the moment.

Short sellers are betting that it is more than we know and Deutsche Bank stock fell to a new low last week. If Draper is correct in his assessment, then it might be a good idea for everyone to hold some Bitcoin as protection against a possibly deepening crisis.

Featured image: (c) nitpicker /

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