Bank stocks crash while gold and especially Bitcoin are the winners of the US banking crisis

European stock markets fell sharply on Monday after the size of the latest US banking crisis became known. In America, losses were limited after the largest banks already fell last week. In the meantime, most of the holes seem to have been closed and we can see who the winners and losers are of the past few days. We do expect some smaller US banks to still go bust in the next few days.

One newspaper spoke of a new ‘Black Monday’ although this is probably a bit exaggerated. However it was undeniable that several large banks had to take on major losses. Santander of Spain and the Commerzbank in Germany fell by almost 10% at a certain point.

Bitcoin digested the panic very well and is once again coming out as a kind of “safe haven” (and clear winner) together with gold.

Blame game

First of all, we should note that the mainstream media seems to be partly blaming the crypto industry for this banking debacle, but there were just as many tech startups and bio-companies banking with the Silicon Valley bank, so that might be a bit shortsighted.

Even President Biden had to make a statement saying that the US banking system is still safe, so this was clearly something bigger than just crypto. The blame game will continue for a while.

Bitcoin itself has weathered the storm very well in fact. On March 10, as the first news of possible problems at Silicon Valley Bank trickled through, the largest cryptocurrency fell below $20,000.

Interest rate increase

Now that since yesterday it appears that the Federal Reserve will again pump liquidity into the system to keep banks afloat and the next interest rate hike is suddenly less certain, Bitcoin is sharply higher and trading at $24,000 again. It is important that this happens at a time when the stock markets are going much lower.

Peter Vanden Houte, chief economist of ING Bank, said:

Until now you saw that the economy could still be financed quite smoothly through the markets, even though central bankers had raised interest rates. This made it more difficult for central banks to slow down the economy and thus bring inflation under control. Due to the events surrounding SVB, you can see that risk aversion is increasing somewhat and market financing is becoming more expensive. Bond risk premiums are rising. The policy of the central banks is now also reflected in market financing. Central bankers may have to go less far in raising their money rates.

USDC

Finally, USDC, the Circle Group’s stablecoin, seems to have reacted very favorably to the news that the US government wants to bail out the Silicon Valley bank. Since Circle had about $3.3 billion with that bank, the reaction was very quick this weekend and the USDC stablecoin fell to 90 cents at one point.

Now she has made up for most of that decoupling and USDC is trading at $1 again.