Bitcoin (BTC) market cap has added $194 billion by 2023. Its 66% year-to-date (YTD) growth is far outperforming major Wall Street banking stocks, especially as fears of a global banking crisis mount.
In addition, Bitcoin has decoupled from U.S. equities for the first time in a year, with its price rising about 65% from S&P 500’s 2.5% gain and Nasdaq’s 15% drop in 2023.
Wall Street banks will lose $100 billion by 2023
The six largest U.S. banks — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Morgan Stanley and Goldman Sachs — have lost nearly $100 billion in market capitalization since the start of the year, according to data compiled by CompaniesMarketCap.com.
Bank of America stock has been the worst performer among Wall Street banking players, with its valuation down almost 17% YTD. Goldman Sachs follows with a drop of almost 12% YTD, followed by Wells Fargo (9.74%), JPMorgan Chase (6.59%), Citi (3.62%) and Morgan Stanley (0.84%).
Valuations of US banks have fallen amid the ongoing collapse of US regional banks. That includes the announcement last week that Silvergate, a crypto-friendly bank, was closing its doors, followed by the subsequent takeover by regulators of Signature Bank and Silicon Valley Bank.
Related: Breaking: SVB Financial Group Files Chapter 11 Bankruptcy
The crisis deepened further with the near-collapse of First Republic Bank, which was rescued at the last minute by a combined $30 billion injection from the likes of Wells Fargo, JPMorgan Chase, Bank of America and Citigroup.
Cyprus and Greece deja vu?
Bitcoin’s rise in the face of a growing US banking crisis is similar to how it reacted during bank collapses in Cyprus and Greece.
The price of BTC rose by up to 5,000% during the 2013 Cyprus financial crisis, caused by Cypriot banks’ exposure to over-leveraged regional real estate companies.
The situation was so dire 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 avoid a bank run, Bitcoin’s price rose by 150%.
“Anxieties about the stability of the banking system, along with falling real interest rates, are creating a good environment for Bitcoin to recover,” said 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 risk.”
This article does not contain any 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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