As the Italian banking crisis continues, major European exchanges are rushing to buy Bitcoin

According to media reports, the Italian government has proposed crisis intervention or "bank rescue" for Monte Paschi, the oldest bank in the world, founded in 1472. The bank is currently facing a huge funding hole and needs a lot of funds for asset restructuring. The solution currently proposed by the Italian government is to increase public debt by up to 20 billion euros, but this figure is not even enough to keep the affected Italian banks afloat.

The remaining funding gap is how much lenders will need to increase their 'loan loss reserves' to make room for bad loan sales; according to Bloomberg data, this gap is quite large. Deutsche Bank analyst Paola Sabbione said that in order to achieve asset restructuring, Italian banks need about 52 billion euros, and the rescue plan needs about 30 billion euros to alleviate the debt crisis.

Beyond that, it depends on the assumption that UniCredit and other lenders can actually raise €20bn by selling assets and maintaining profits, which remains uncertain, so taxpayers are likely to fill the hole.

Sabbione said:

“Some publicly traded banks may be able to raise some of the capital needed for the recapitalisation, including Monte dei Paschi di Siena… The government will have to fill the rest. But even then, at the moment, it will not be enough.”

Italian taxpayers will inevitably be negatively affected by this financial crisis, and higher public debt will result in a greater tax burden for future generations.

In stark contrast to the uncertainty offered by Italy and its banking sector, Bitcoin users enjoy the transparency of a distributed ledger, without the need for a third party to collect or make payments. More importantly, no banks are involved, as Bitcoin is a full reserve system, unlike the fragile bank reserve system.

Governments also cannot use Bitcoin to impose debt on future generations as they can with fiat currencies, so in this scenario, the world’s oldest bank is crumbling before our eyes, while Bitcoin’s appeal is growing rapidly.

As shown in the chart below, when Bloomberg reported on Dec. 19 that Italy proposed raising its public debt ceiling to save its banks , European Bitcoin exchanges witnessed a frenzy of buying Bitcoin in the following days . There are also concerns about further unsettling elections in Europe, which could threaten the euro and exacerbate the eurozone crisis that has already engulfed Greece.

Similar to aftershocks after an earthquake, the Bitcoin market has already felt the tremors from Italy. According to the data shown above, Bitcoin peaks have been getting higher and higher since December 19th .

Furthermore, according to MarketWatch, on December 21, “European and American buyers accounted for the majority of Bitcoin trading volume.” So the reason why Bitcoin broke through $800 may be partly because people turned to Bitcoin in response to the Italian banking crisis.