The market capitalization of Bitcoin (BTC) has increased to $ 194 billion in 2023. The growth of 66% year-to-date (YTD) is vastly outperforming the top Wall Street bank stocks, mainly because the fear of a global banking crisis is increasing.
In addition, Bitcoin has been separated from US stocks for the first time in a year, with prices rising by around 65% compared to the S&P 500’s 2.5% gain and the Nasdaq’s 15% decline in 2023.
Wall Street banks lose $100B by 2023
The six largest US banks – JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), Wells Fargo (WFC), Morgan Stanley (MS), and Goldman Sachs (GS) – have lost nearly $100 billion in market. value since the beginning of the year, according to data collected by CompaniesMarketCap.com.
Bank of America stock was the worst performer among Wall Street banking players, with its value down 17% YTD. Goldman Sachs trailed with a YTD decline of nearly 12%, followed by Wells Fargo (-9.75%), JP Morgan Chase (<6.5%), Citi (<3,5%), lan Morgan Stanley (>1%).
The value of US banks has fallen amid the collapse of US regional banking. This includes last week’s announcement that Silvergate, a crypto-focused bank, is closing its doors and the regulatory takeover of Signature Bank and Silicon Valley Bank.
Related: Breaking: SVB Financial Group files for Chapter 11 bankruptcy
The crisis was exacerbated by the near collapse of First Republic Bank, which was saved at the last moment through a joint 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 the growing US banking crisis is similar to the reaction to the banking collapses in Cyprus and Greece.
The price of BTC rose by 5,000% in the middle of the Cypriot financial crisis in 2013, which was prompted by the exposure of Cypriot banks to overleveraged regional real estate companies.
The situation became so difficult that the Cypriot authorities, in March 2013, closed all banks to prevent them from opening.
When Greece faced a similar crisis in 2015 and imposed capital controls on citizens to prevent them from opening banks, the price of Bitcoin gained 150% during the period.
“Fears about the stability of the banking system, together with a decrease in real interest rates, create a favorable environment for Bitcoin to rebound,” noted Ilan Solot, co-head of digital assets at the London broker Marex, adding that crypto” is seen by some investors as a hedge against systemic risk.”
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 decisions.