Bitcoin boosted by banking crisis and Fed decision

A broadening banking crisis gives a renewed boost to Bitcoin and other major cryptocoins. First Republic Bank may have been taken over by JP Morgan at the beginning of this week, but other regional banks continue to run into problems. This time the pressure is on PacWest and Western Alliance.

The news that the Federal Reserve did what the market expected (raising interest rates again by 25 basis points) was also good news for crypto.

The Fed raises interest rates by another 0.25% pic.twitter.com/J7sZ7DhtMn

— Wall Street Memes (@wallstmemes) May 3, 2023

The US interest rate is thus at a level of 5.25%, the highest in 16 years.

Work from home

Regional banks in the United States are increasingly finding themselves in trouble on the stock market and there are various reasons for this.

JUST IN:

Dozens of regional bank stocks are plunging today, as the bank crisis continues to gain momentum.

PacWest, $PACW: -36%
Western Alliance, $WAL: -31%
Metropolitan Bank, $MCB: -27%
HomeStreet, $HMST: -23%
Zions Bank, $ZION: -15%
KeyCorp, $KEY: -9%
HarborOne, $HONE: -10%… pic.twitter.com/TxKZIhFe85

— WhaleWire (@WhaleWire) May 2, 2023

Firstly, savers withdraw their money from smaller banks because they think these institutions could get into trouble. Second, there are many short sellers betting on the collapse of those smaller regional banks, so they take an ever larger position against the stock.

Third, many of them have outstanding loans with large office landlords, and those groups are also in trouble because of the persistent ‘work from home’ culture that is much more a thing in the US than in Europe. In San Francisco, for example, large office towers are almost empty.

We doing this again?

Pacwest -28%
Western Alliance -25% pic.twitter.com/N0TdzoYNMT

— db (@tier10k) May 2, 2023

The antelopes are being prowled by the lions here and the lions are going to find other ones to attack and bring down.

Dick Bove, financial strategist with Odeon Capital Group, explained. He is convinced other banks will still fail.

Bitcoin boost

In the midst of all that bank violence, investors are naturally looking for a safe haven again, and it is probably because of this that Bitcoin benefits.

While we heard analysts this weekend predict that the largest digital coin would drop to $25,000, this is so far not the case and Bitcoin is steaming higher again after a short break.

VisualGeneration / Depositphotos.com