The ongoing banking collapse is sending shivers down the spines of US investors as they are losing trust in the policies that the Fed has been issuing. This has been seen via an increasing number of Short sellers in the stock market and bank withdrawals sending major banks under.
Where is this money going? Is it going into crypto? The answer is no. Most US citizens are still wary of the crypto industry, which the continued bear market has shown. A firm survey by Goldman Sachs shows that 62% of the firms do not intend to enter crypto, which is a long way from 2021’s 39%.
Dwindling trust in the US banking system
About half of US citizens are confirming that they no longer have trust in banks and are afraid to keep their money there. The main reason behind this decision is the looming financial crisis and the harsh rates hike by the Federal Reserve (Fed) that directly impacts their day-to-day lives.
Interest rate hikes are meant to slow down inflation rates. However, they impact normal citizens greatly by making borrowing money more expensive. As a result, fewer people are interested in borrowing, so the net spending falls. The Federal TReserve has been raising interest rates continuously since 2022 to combat inflation to a range of 5%, only to indicate signs of slowing down recently.
One of the side effects of continuous hikes is the increased cost of living and other strings of economic damages like bank collapse. However, the US is still posting strong job statistics, and the inflation rates are slowing down, showing that all is not lost yet.
Crypto isn’t safe, either
Investors still need to be convinced about getting into the crypto space. Recent figures from Goldman Sachs show that even more institutions are willing to stay away from the crypto space in this market cycle.
The banking institution’s findings show that roughly 26% of family offices are currently invested in crypto, up from 16% recorded in 2021. However, among those not invested in the crypto industry, the number willing to stay away from the crypto space has grown from 39% in 2021 to 62 % now.
The number of respondents potentially interested in crypto fell from 45% to 12% over the same span. Family offices are wealth management firms that work with high-net-worth individuals and families. Goldman Sachs conducted the survey discussed in this article using 166 family offices worldwide between January and February 2023.
While these findings come from a market in distress of a looming financial meltdown, they clearly show how interest in both banks and crypto industries is fairing at the moment. However, it doesn’t mean that any of the information covered here is financial advice. Keep watching FinTech Express for updates on this and other FinTech-related news.