Bitcoin (BTC) added $194 billion in market capitalization in 2023. Its 66% year-to-date growth is vastly outperforming major banking stocks on Wall Street, especially as fears of a global banking crisis grow.
Moreover, Bitcoin decoupled from US stocks for the first time in a year, with its price up nearly 65% against the S&P 500’s 2.5% gain and the Nasdaq’s 15% decline in 2023.
Wall Street banks will lose $100 billion in 2023
The six largest US banks — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Morgan Stanley and Goldman Sachs — have lost nearly $100 billion in market valuation since the start of the year, According to data collected by CompaniesMarketCap.com.
Bank of America stock is the worst performer among Wall Street banking players, with a valuation down nearly 17% year-to-date. Goldman Sachs is down nearly 12% year-to-date, followed by Wells Fargo (9.74%), JPMorgan Chase (6.59%), Citi (3.62%) and Morgan Stanley (0.84%).
Ratings of US banks plummeted amid the continuing collapse of US regional banks. That includes last week’s announcement that a cryptocurrency-friendly bank, Silvergate, was closing its doors, followed by regulators’ subsequent acquisition of Signature Bank and Silicon Valley Bank.
Related: BREAKING: SVB Financial Group files for Chapter 11 bankruptcy
The crisis widened further with the imminent collapse of First Republic Bank, which was saved at the last minute by a 30 billion injections combined By Wells Fargo, JPMorgan Chase, Bank of America, and Citigroup — among others.
Cyprus and Greece Deja Vu?
Bitcoin’s rise in the face of a growing US banking crisis is similar to its reaction during the bank meltdowns in Cyprus and Greece.
The price of BTC soared by as much as 5,000% amid the Cypriot financial crisis in 2013, spurred by the exposure of Cypriot banks to highly indebted regional real estate companies.
The situation was so dire in March 2013 that the Cypriot authorities closed all the banks to avoid a bank run.
When Greece faced a similar crisis in 2015 and imposed capital controls on citizens to avoid a bank run, the price of bitcoin soared 150%.
“Concerns about the stability of the banking system, coupled with lower real interest rates, are creating a good environment for Bitcoin to recover.” comment Ilan Solot, co-head of digital assets at London broker Marex, adding that cryptocurrency 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 a decision.
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