I'm legitimately worried about Bitcoin being integrated into the traditional financial system

Learning about Silicon Valley Bank and how they went under because of their exposure to treasuries highlights how poorly banks mitigate risk.

SVB had a significant amount of treasuries on their balance sheet. The increase in interest rates caused their treasuries to depreciate in value.

This isn't necessarily a problem as long as the treasuries are held to maturity.

But of course, a bank run started and in order to facilitate withdrawals they needed to sell those treasuries at a loss. And when many people withdrew at once, this cumulative loss grew exponentially ultimately collapsing the bank.

I'm sure I didn't explain this correctly but my take away from that event is that banks hold assets as a means to be solvent and that fluctuating prices can introduce risk.

Because of the hardness of bitcoin, it is much harder to hide and remedy losses on a bank's balance sheet.

This is not an anti-bitcoin post, this is more just thinking about how banks will hold bitcoin in a way that doesn't screw over people.

SVB had a relatively simple solution, just make depositors whole (no big deal).

But looking at how the FTX payout is occurring, people are getting made whole in dollar terms. This may be the precedent moving forward.

I can already hear people smashing their keyboards "This is a non-issue for self-custody, ya dingus!"

Banks still facilitate loans, they are an essential part of our economy. I don't believe banks go extinct anytime soon.

What happens if these banks mismanage their bitcoin holdings?

Bitcoin is "honest money"

What I mean by that is that it's not gold in vault, "Trust me bro, it's not tungsten"

Or manipulating assets to give the appearance that a bank's balance sheet is healthy. "Bro we have 500 houses in collateral, we're good! Where? Oh uh... Detroit, we bought them in 1994".

Or just the simple bureaucracy is enough to hide balance sheet holes. "We have a 25 million dollar hole, thank God it's Friday! We'll be fine on Monday!"

Having a transparent, digitally native, asset that trades 24/7 will make irresponsible banks collapse within minutes.

Hooray! Those dumbasses get what they deserve! Not so fast!

I truly believe when some of these banks collapse it will be extremely painful for their customers and who is the scapegoat?

Bitcoin.

I can already hear the news soundbites "Bitcoin causes bank collapse, thousands lose life savings!"

This will be the next level of bullshit that bitcoin will face and because people don't understand nuance they will vehemently condemn bitcoin.

I think this will be the ugliest part of bitcoin's adoption because the people who don't even have bitcoin become vulnerable to these irresponsible banks.

The blame will most certainly be foisted onto bitcoin again.

I just feel this in my bones. This is the next "It's so over ????" phase of bitcoin.

SVB couldn't mitigate risk holding treasuries, what does that say about other assets?