Bitcoin (BTC) set a new record in daily transactions on the same day the US government was quietly planning a bank buyout

On Sunday, as the US government worked behind the scenes with two major banks to develop the latest financial rescue plan, the Bitcoin network hit a new all-time high in the number of transactions processed each day. There were more confirmed transactions than at any time in its 14-year history, beating the previous record set during the 2017 bull run. Today, JPMorgan Chase acquired First Republic after the troubled bank’s assets were confiscated by regulators in what became the second-largest banking collapse in US history.

While the two events – the increasing use of Bitcoin and the recent example of US financial disaster – are not strictly related, the timing here does hint at the future of the crypto industry and Bitcoin’s possible place in an increasingly dysfunctional economy there. As regulators and lawmakers work to reduce crypto’s penetration into the broader economy, the private banking sector is showing an inability to self-govern.

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After weeks of uncertainty and a falling share price, First Republic was acquired by the Federal Deposit Insurance Corporation (FDIC) to prevent a possible bank run, further contagion and drawing on the insurance fund’s reserves. The Swiss Federal Banking Supervisory Authority immediately sold “everyone [First Republic’s] Deposits and essentially all [its] Assets to JPMorgan Chase, the largest US bank, which also received $50 billion in funding to complete the deal. Democratic politicians are likely to challenge the sale, which was reportedly completed before the market opened on Monday.

“Our government invited us and others to get involved, and we did,” said Jamie Dimon, CEO of JPMorgan. Crypto fans may know Dimon as one of the most high-profile “blockchain” advocates and long-time Bitcoin critics. First Republic’s failure is second only to Washington Mutual, which failed during the Great Financial Crisis that also created Bitcoin. While some blame could be placed on First Republic’s management, economists largely agree that the collapse was at least partly due to rising interest rates and the Federal Reserve’s tightening monetary policy, which also caused Silvergate, Silicon Valley and Signature banks to collapse early brought this year.

Where this situation aligns with Bitcoin in particular is that the crypto industry is part of a broader political realignment towards populism. Crypto isn’t the only movement challenging the authority of central banks and established powers, as many people will see the First Republic bailout as yet another example of privatizing gains and socializing losses. In trying to prevent a massive drop in FDIC reserves, political actors have essentially said that all US banks are too big to fail – a sort of moral dilemma that protects a particular class from the consequences of their decisions.

Bitcoin has evolved into an alternative currency system that many believe could eventually serve as a legitimate global reserve currency like the US dollar is today. The system is attractive to some because it follows pre-packaged rules, including a set timeline for issuance of money by social consensus (as opposed to the political and monetary interests that dominate the greenback). Bitcoin’s price rose steadily during the last cycle of bank failures and could catch an upward wave this time as well. That doesn’t necessarily mean that bitcoin is a “hedge” against financial disasters, or that people prefer “trustworthy” financial systems to increasingly unreliable banks.

The timing of the latest bitcoin blockchain milestone is purely coincidental. Bitcoin transactions have been on an upward trend since the introduction of Bitcoin Ordinals, which enabled the network to support non-fungible tokens (NFT). More than 2.39 million ordinal numbers have been “written” to date, according to Glassnode data cited by Blockworks. But while bitcoin NFTs now account for about half of transactions on the network (which reward bitcoin miners with increased transaction fees and potentially help secure bitcoin’s long-term “safety budget”), not all bitcoiners agree this is a worthwhile function.

There are many Bitcoin purists who believe that the network should be preserved for monetary purposes and that tradable digital collectibles are frivolous. Sorry, bitcoin is an open source network – meaning people are free to use the technology as they please. If bitcoin has a role to play in the future world economy, it is only because people are free to use it however they want.

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