• PacWest Bancorp, Western Alliance Bank and Metropolitan Bank all crashed by more than 20%, and their stocks had to be halted.
  • Year to date, about $2 trillion has been wiped out of the US banking sector.
  • Bitcoin price is trading above $28,500, and NUPL suggests that only 30% of the market cap is experiencing profits.

The banking crisis that first hit the United States of America in Q1 this year is seemingly beginning to take shape again. The last time this happened, Bitcoin price had a good time, and by the looks of it, the conditions are certainly pointing towards a similar outcome this time around.

The US banking crisis continues

Over the last 24 hours, many regional bank stocks crashed in just a couple of minutes during the day, and as a result, their trading had to be halted. The ones that topped the list were PacWest Bancorp, which plunged by 29%, followed by Western Alliance Bank, plummeting by 25%, along with Metropolitan Bank, which declined by about 24%.

But as terrible as the condition of the market is at the moment, the year-to-date shrinking of these stocks’ value is far more terrible. Notable financial commentator, The Kobeissi Letter, brought these banks to light, tweeting,

1. HomeStreet, $HMST: -75%
2. PacWest, $PACW: -71%
3. Metropolitan Bank, $MCB: -64%
4. Zions Bank, $ZION: -51%
5. Western Alliance, $WAL: -47%
6. KeyCorp, $KEY: -45%
7. HarborOne, $HONE: -39%
8. Valley National, $VLY: -35%
9. Truist, $TFC: -33%
10. Citizens Financial, $CFG: -32%

All in all, since January 1, the US banking sector has erased nearly $2 trillion, including the losses from the collapse of the Silicon Valley Bank, Signature Bank, Silvergate Bank and the First Republic Bank.

The commentator also discussed why the Federal Deposit Insurance Corporation (FDIC) is refraining from making any move. The Kobeissi Letter speculated that the regulators do not want to public to perceive their actions as “bailouts” after what happened in 2008…This option is perceived as “safer,” but this is a short-term viewpoint.”

They further added that the entire US banking system could end up being controlled by the top 15 banks eventually. The top banks already control 75% of all US deposits, and this figure could shoot up to 90%.

Put simply, the adverse development in the US banking sector puts Bitcoin in a favorable position.

Bitcoin price rises, but crypto struggles

Bitcoin price rose by more than 2% on May 2 to close above $28,500 as some US banks struggled. Furthermore, if the banking crisis continues, there would be room for further growth. This would be akin to the Q1 banking crisis when BTC noted a near 40% rally, thanks to its decoupling from the US stock market.

BTC/USD 1-day chart

BTC/USD 1-day chart

Additionally, the Net Unrealised Profit/Loss indicator (NUPL) suggests that only 30% of the market cap is experiencing profits at the moment. The indicator’s presence in the optimism zone further dictates that there is more to come for the cryptocurrency since nearly 70% of the market cap is yet to realize gains.

Bitcoin NUPL

Bitcoin NUPL

However, the lack of regulatory clarity is still an issue, as it is apparently driving investors away from the US. According to the founder of Blockworks, Jason Yanowitz,

Instances of the same presently exist as Coinbase earlier this week launched its international derivatives exchange for users in eligible jurisdictions outside the US. Syndica - a web3 cloud infrastructure developer - also opened an entity in Dubai this year owing to the regulatory uncertainty in the country.

If such situations continue developing in the country, the crypto market will eventually take a hit,  which would not be favorable for Bitcoin or the altcoins.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

Is Altcoin Season here as Bitcoin reaches a new all-time high?

Is Altcoin Season here as Bitcoin reaches a new all-time high?

Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.

More Altcoin News
Shanghai court confirms legal recognition of crypto ownership

Shanghai court confirms legal recognition of crypto ownership

A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.

More Cryptocurrencies News
BTC hits an all-time high above $97,850, inches away from the $100K mark

BTC hits an all-time high above $97,850, inches away from the $100K mark

Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.

More Bitcoin News
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.

More Shiba Inu News
Bitcoin: New high of $100K or correction to $78K?

Bitcoin: New high of $100K or correction to $78K?

Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP