In 2023, the market capitalization of Bitcoin (BTC) increased by $194 billion, or about 65%. It has far outpaced Wall Street’s top banking stocks, especially at a time when fears of a global banking crisis are on the rise.
Furthermore, for the first time in about a year, Bitcoin has detached itself from US stocks: Its value is up 65% in 2023, compared with the S&P 500’s 2.5% gain and the Nasdaq’s 15% decline.
Wall Street banks lost $100 billion in 2023
Since the start of the year, the rating of the six largest US banks — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Morgan Stanley e Goldman Sachs — it shrank by nearly $100 billion.
Bank of America shares have been the worst performer of US banks, devaluing nearly 17% year-to-date. Followed by Goldman Sachs (-12%), Wells Fargo (-9.74%), JPMorgan Chase (-6.59%), Citi (-3.62%) and Morgan Stanley (-0.84%).
US bank valuations plummeted following the collapse of some US regional banks. Last week it was announced that Silvergate, a crypto-friendly bank, would also close its doors; shortly before, the giants Signature Bank and Silicon Valley Bank had also filed for bankruptcy.
The crisis further escalated with the near-collapse of First Republic Bank, bailed out at the last minute thanks to a joint $30 billion injection by Wells Fargo, JPMorgan Chase, Bank of America, Citigroup and others.
Deja vu of Cyprus and Greece?
The rise of Bitcoin in the face of the US banking crisis recall how the asset reacted during the banking collapses of Cyprus and Greece.
The Cyprus financial crisis in 2013, triggered by the exposure of Cypriot banks to overly leveraged regional real estate companies, sent the price of BTC soaring by 5,000%.
In March 2013 the situation was so serious that Cypriot authorities closed all banks to avoid a bank run. Greece also imposed capital controls on citizens when it faced a similar crisis in 2015, when the price of Bitcoin soared by 150%.
“Fears related to the stability of the banking system, together with the decline in interest rates, create a perfect setting for a BTC recovery,” commented Ilan Solot, Co-head of Digital Assets at the London-based brokerage Marex. He added that “by some investors, cryptocurrencies are considered a hedge against systemic risks.“
