Bankruptcies Surge as U.S. Economy Shows Cracks — Could Crypto Repeat Its Pandemic Playbook?

The U.S. economy’s resilience is facing new cracks, as a string of once-beloved household names collapse under the pressure of elevated borrowing costs, shifting consumer demand, and an uncertain policy environment. 

This summer, corporate bankruptcies surged to their highest level since 2020, reviving memories of the pandemic era’s volatility across both traditional markets and crypto.

Retail Icons Buckle Under Pressure

According to S&P Global, 71 public and private companies filed for bankruptcy last month, up from 63 in June, despite headline GDP growth of 3% and a stock market that continues to show strength on the surface. The list of casualties includes iconic brands that once defined American malls and Main Streets: Forever 21, Joann’s, Rite Aid, and Party City.

Even the canned goods giant Del Monte Foods succumbed to mounting debt and declining demand, entering Chapter 11 with liabilities reported between $1 billion and $10 billion. More recently, fashion retailer Claire’s filed for bankruptcy on Aug. 6, marking its second restructuring attempt as it blamed weaker consumer spending and the heavy burden of higher interest rates.

The trend underscores a painful paradox: while equities soar and top-line growth looks healthy, cracks are widening at the corporate level, particularly in consumer-facing industries. 

“Companies are contending with elevated interest rates as uncertainty from U.S. tariff policy pressures costs and supply chain resilience,” S&P Global noted.

Lessons From Crypto’s Pandemic Resilience

The sharp rise in bankruptcies has also drawn comparisons to the COVID-19 era, when businesses shuttered and economies faltered—but Bitcoin and the broader crypto market staged one of their most explosive rallies in history.

When the pandemic first struck in March 2020, Bitcoin tumbled by nearly 30% in just days, plunging from around $8,900 to $6,200. But instead of staying down, it staged a historic recovery. By the end of 2020, Bitcoin had soared to almost $29,000—a staggering 416% annual gain.

That momentum carried into 2021, when Bitcoin broke $50,000 in February and surged to nearly $69,000 by November, marking the peak of what many call crypto’s biggest bull run.

Bitcoin price chart (Source: CoinMarketCap)

But the pandemic rally also came with caveats. Studies show that while Bitcoin generated massive profits, it did not act as a true safe haven. 

Instead, its correlation with stock markets strengthened, meaning crypto was more of a speculative diversifier than an independent hedge. Gold, not Bitcoin, remained the more reliable safe haven during the crisis.

Echoes in Today’s Market

Today, Bitcoin trades at around $113,472—down slightly on the day but far removed from its pandemic-era lows. Yet the question looms: with corporate bankruptcies accelerating, could crypto once again benefit from economic strain, or has its correlation to traditional markets erased that safe-haven narrative?

During COVID-19, investor attention itself became a powerful driver of crypto gains, with heightened interest fueling rallies that outpaced fundamentals. In today’s environment of rising bankruptcies and financial uncertainty, similar dynamics could reemerge—though the risks are different. Higher interest rates, regulatory scrutiny, and an increasingly institutionalized crypto market may mean that volatility could cut both ways.

The Big Question: Buy the Dip or Brace for More Pain?

For investors, the parallel is hard to ignore. The pandemic crash set the stage for crypto’s biggest rally ever. But with corporate distress mounting in 2025, the stakes are different. Crypto is no longer the outsider asset it once was—it is deeply tied to global markets.

That leaves investors facing a familiar yet thorny question: is the current pullback in Bitcoin and other digital assets an early signal of another historic rebound, or does the surge in bankruptcies mark the beginning of broader pain across both traditional and crypto markets?

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