The market value of Bitcoin (BTC) has added $194 billion by 2023. Its 66% year-to-date (YTD) growth is outpacing the best Wall Street banking stocks, especially as fears of a global banking crisis rise.
Also, Bitcoin is decoupled from US stocks for the first time in a year, with the price up about 65% compared to the S&P 500’s 2.5% gains and the Nasdaq’s 15% decline in 2023.
Wall Street banks lose 100 billion USD in 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 the market valuation since the start of the year, according to data compiled by CompaniesMarketCap.com.
Bank of America’s stock is the worst performer among Wall Street bankers, with a nearly 17% decline in valuation. Goldman Sachs follows with a decline of nearly 12% YTD followed by Wells Fargo (-9.75%), JP Morgan Chase (1%).
US bank valuations have fallen amid the ongoing US regional banking collapse. That includes the announcement last week that Silvergate, a crypto-focused bank, was closing its doors and the subsequent takeover of Signature Bank and Silicon Valley Bank by regulators.
Related: Breaking: SVB Financial Group files for Chapter 11 bankruptcy
The crisis widened further with the near-collapse of First Republic Bank, which was saved at the last minute by a combined injection of $30 billion from Wells Fargo, JP Morgan Chase, Bank of America, Citigroup and others.
Cyprus and Greece deja vu?
The emergence of Bitcoin in the face of a growing US banking crisis is similar to how it reacted during banking collapses in Cyprus and Greece.
BTC’s price grew by up to 5,000% amid Cyprus’ financial crisis in 2013, prompted by Cypriot banks’ exposure to excess regional property companies.
The situation was so serious that in March 2013 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 avoid a bank run, Bitcoin’s price increased by 150% during the period.
“Fears about the stability of the banking system, together with falling real interest rates, create a good environment for Bitcoin to rise,” noted Ilan Solot, co-head of digital assets at London broker Marex, adding that the crypto “is seen by some investors as a hedge against systemic risks.”
This article does not contain investment advice or recommendations. Any investment and trading move involves risk and readers should do their own research when making a decision.