The recent episode of Macro Markets, hosted by renowned crypto analyst Marcel Pechman, touched upon the ongoing banking crisis and its potential consequences on the cryptocurrency market. One of the crucial focal points was the 50% price decline of PacWest Bancorp, a bank with $40 billion in assets, with 80% of its lending portfolio dedicated to commercial real estate loans and residential mortgages. The primary cause for concern in this situation is none other than rising interest rates.
As the total underwater bond position of US banks reaches around $600 billion (excluding derivatives), the U.S. Treasury has had to step in and bail out three banks facing bankruptcy: Silicon Valley Bank (SVB), Signature Bank, and First Republic. SVB’s losses alone sum up to a staggering $20 billion, which accounts for 15% of the total Federal Deposit Insurance Corporation (FDIC) capacity.
Pechman further explained how the potential failure of PacWest Bancorp might impact the price of Bitcoin (BTC) and why gold has lately been close to its all-time high above $2,050. Additionally, the ongoing banking crisis has affected government debt, causing it to spiral out of control. Although this is a negative occurrence, it could prove to be extremely positive for Bitcoin in the long run.
The subsequent segment of Macro Markets discussed the topic of oil prices. Within just three weeks, the energy commodity has seen a decline of 17.5%. Pechman pointed out that the Organization of the Petroleum Exporting Countries (OPEC) doesn’t have much control over production and that the U.S. government played a significant role in reducing the demand for oil imports.
According to Pechman, the most significant point concerning Bitcoin is the possibility of oil demand flatlining due to weaker economic conditions. This could be viewed as a short-term negative driver for risk assets, including cryptocurrencies.
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