Bitcoin’s (BTC) market capitalization added $194 billion in 2023. Its 66% year-to-date growth (YTD) is well outpacing leading banking stocks on Wall Street, especially as fears of a global banking crisis increase.
Additionally, Bitcoin has decoupled from US stocks for the first time in a year, with its price rising around 65% from the S&P 500’s 2.5% gains and Nasdaq’s 15% decline in 2023. .
Wall Street banks 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, down nearly 17% since the rating began. Goldman Sachs follows with a drop of almost 12% since the start of the year, followed by Wells Fargo (9.74%), JPMorgan Chase (6.59%), Citi (3.62%) and Morgan Stanley ( 0.84%).
US bank valuations have fallen amid the ongoing US regional banking meltdown. This includes the announcement last week that Silvergate, a crypto-enabled bank, was closing its doors, followed by the subsequent takeover by regulators of Signature Bank and Silicon Valley Bank.
Related: Breakup: SVB Financial Group Files For Chapter 11 Bankruptcy
The crisis deepened further with the near collapse of First Republic Bank, which was rescued at the last moment by a combined injection of $30 billion by Wells Fargo, JPMorgan Chase, Bank of America and Citigroup, among others. .
Cyprus and Greece already seen?
Bitcoin’s rise to prominence in the face of a growing banking crisis in the United States is similar to how it reacted during banking meltdowns in Cyprus and Greece.
The price of BTC rose by up to 5,000% amid the Cypriot financial crisis in 2013, caused by the exposure of Cypriot banks to overleveraged regional real estate companies.
The situation was so serious in March 2013 that the Cypriot authorities closed all banks to avoid a bank run.
When Greece faced a similar crisis in 2015 and imposed capital controls on citizens to prevent a bank run, the price of Bitcoin rose by 150%.
“Fears over the stability of the banking system, along with falling real interest rates, create a good environment for Bitcoin to rebound,” commented Ilan Solot, co-head of digital assets at London-based brokerage 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 conduct their own research when making a decision.