Bitcoin (BTC) market capitalization has added $194 billion in 2023. Its 66% year-to-date (YTD) growth is vastly outpacing major Wall Street banking stocks, particularly as prices rise. fears of a global banking crisis.
Additionally, Bitcoin has delinked from US stocks for the first time in a year, with its price rising around 65% versus the S&P 500’s 2.5% gain and the Nasdaq’s 15% drop in 2023. .
Wall Street banks lose $100 billion in 2023
The six largest banks in the US, JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), Wells Fargo (WFC), Morgan Stanley (MS) and Goldman Sachs (GS), have lost almost $100 billion in the market. valuation since the beginning of the year, according to data collected by CompaniesMarketCap.com.
Bank of America shares are the worst performer among Wall Street banking players, down nearly 17% YTD on valuation. Goldman Sachs trails with a decline of almost 12% year to date, followed by Wells Fargo (-9.75%), JP Morgan Chase (1%).
The valuation of US banks has fallen amid the ongoing regional US banking meltdown. That includes last week’s announcement that Silvergate, a crypto-focused bank, would close its doors and the subsequent acquisition of Signature Bank and Silicon Valley Bank by regulators.
Related: Breaking: SVB Financial Group files for Chapter 11 bankruptcy
The crisis was further amplified by the near collapse of the First Republic Bank, which was saved at the last moment through a Combined injection of $30 billion by Wells Fargo, JP Morgan Chase, Bank of America, Citigroup and others.
Cyprus and Greece deja vu?
Bitcoin’s rise in the face of a growing US banking crisis is similar to how it reacted during the banking collapses in Cyprus and Greece.
The price of BTC grew by as much as 5,000% amid the 2013 Cyprus financial crisis, triggered by Cypriot banks’ exposure to overleveraged regional real estate companies.
The situation was so dire that the Cyprus authorities, in March 2013, closed all banks to prevent a bank run.
When Greece faced a similar crisis in 2015 and imposed capital controls on citizens to prevent a run on the banks, the price of Bitcoin rose 150% over the period.
“Fears about the stability of the banking system, coupled with declining real interest rates, create a good environment for Bitcoin to recover.” noted Ilan Solot, co-head of digital assets at London-based broker Marex, added that cryptocurrency “is seen by some investors as a hedge against systemic risks.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
