Bitcoin, the next financial crisis will start here

In the United States, news that should have set off alarm bells has gone unnoticed: JP Morgan is considering issued loans collateralized by Bitcoin and cryptocurrencies. This is a sensational development, considering CEO Jamie Dimon’s longstanding distrust of cryptocurrencies, which he has repeatedly labeled as "frauds" and "worthless".

Now, however, something has changed. And when even the most skeptical Wall Street bankers open the door to digital assets, it’s not just news. It’s a signal. The crypto world, born to break away from traditional finance, is now being embraced by the very giants it sought to dismantle. The real question is this: are we witnessing a momentous turning point or the beginning of a dangerous déjà vu? Because when banks begin to use highly volatile assets as collateral for leverage, the risk isn’t just for them. It’s for everyone. And the scenario, if you look closely, is all too reminiscent of 2008.

This is why the next financial crisis could start right here.

Bitcoin, the next financial crisis will start right here

From 2020 to today, Bitcoin has been almost four times more volatile than the major equity indices. Four times. Yet, this very asset is being taken increasingly seriously as collateral by traditional banks. It’s a bit like using dynamite to build the foundations of a house. The risk of an explosion is just around the corner.

The problem isn’t just BTC’s intrinsic volatility, but the systemic risk from excessive leverage. Consider what happens if the cryptocurrencies used for collateral are used in institutional lending. Or, even worse, if the leverage increases through stablecoins backed by US government bonds. It seems like a sophisticated mechanism, but it’s the same one that triggered a systemic failure in 2008 with subprime mortgages and CDOs.

And just as all this is being discussed, the Genius Act arrives, the bill intended to regulate stablecoins, making them more "secure," fully backed 1:1 with U.S. dollar reserves. But here lies the first major deception. Regulating stablecoins doesn’t make Bitcoin less risky, which remains a high-beta asset, hyper-correlated with stocks and therefore vulnerable to the same shocks. The Genius Act only serves to provide a facade of regulatory legitimacy (a "gold sticker," as Senator Elizabeth Warren called it) to a sector desperately seeking institutional approval to continue expanding.

Bubble or crisis? Here’s what happens if the stablecoin framework collapses.

According to US Treasury Secretary Scott Bessent, the stablecoin market could grow tenfold in the next few years, from $200 billion to $2 trillion. These are enormous numbers. What if these digital currencies (perhaps issued by private operators like Tether, already among the largest buyers of US Treasuries) suddenly found themselves under pressure in the event of a crisis of confidence?

In a scenario where investors begin to doubt the solvency of these stablecoins, perhaps after a wave of cyber attacks or a new wave of crypto crashes, the issuing companies could be forced to quickly sell their assets (i.e., government bonds) to cover the repayment requests. This would lead to a bank run, a massive sell-off of bonds, and a disruption in the repo market, with uncontrolled spikes in bond volatility. This time, however, with less room for central banks to intervene.

The question is: have we learned anything from the past? Or are we just repeating the mistake of repeal of derivatives regulation in 2000, which paved the way for the 2008 crisis? The fact that the Genius Act received bipartisan support in the US Congress, despite strong criticism from within the Democratic Party, suggests that the lesson has not yet been learned.

And as always, when it comes to a crisis, it won’t be the speculators who pay the price, but the average citizen. Those who will lose their jobs, those who will see the cost of credit rise, those who will be called upon to cover the losses caused by those who gambled with yet another "financial innovation."

So, are we really ready to integrate Bitcoin and similar assets into the beating heart of global finance? Or are we just preparing the next perfect storm?

The information and considerations contained in this article should not be relied upon as the sole or primary basis for making investment decisions. The reader retains full freedom in their investment choices and full responsibility for making them, since only they know their risk appetite and time horizon. The information contained in the article is provided for informational purposes only, and its disclosure does not constitute and should not be considered an offer or solicitation to the public.

Original article published on Money.it Italy. Original title: Bitcoin, la prossima crisi finanziaria partirà da qui