As the US stock market reels under the pressure of a regional banking crisis, concerns about further bank collapses have not completely dissipated following the recent downfall of the First Republic Bank. Contrastingly, this uncertainty appears to be working in the favor of the crypto market. Over the past few months, a noteworthy pattern has emerged, where the Bitcoin price increases whenever US bank stocks suffer due to recurrent bank failures.
In the beginning of this week, US regional bank stocks displayed recovery in pre-market hours, inciting renewed hopes of an end to the ongoing banking crisis. However, Bitcoin’s price experienced a dip as the crypto exchange Binance temporarily halted Bitcoin withdrawals.
Renowned analyst and author Christopher Whalen pointed out that the extensive losses on the balance sheets of major banks could lead to significant problems. He believes a looming banking crisis could be averted if the US Federal Reserve alters its current monetary policy stance. Consequently, this predicament presents a plausible scenario for a surge in Bitcoin’s price in the following months, especially if the banking crisis persists.
Whalen warned, “Unless the Fed is willing to walk back their current policy and give the banks some more breathing room, I don’t think we will get out of the woods. I think you will see more banks fail.” Moreover, when questioned about the expectation of losses in commercial real estate materializing by the end of 2024 or the first quarter of the same year, Whalen indicated that all banks involved in lending to commercial real estate might face uncertainty.
Based on the inverse correlation between bank stocks and Bitcoin’s price, the crypto market appears to be well-positioned for a bull run in the upcoming quarters. However, it is essential to conduct thorough market research and consider the risks involved before investing in cryptocurrencies, as the author or the publication assumes no responsibility for personal financial losses stemming from readers’ investments.
In other news, Binance has added more functionalities for PEPE and FLOKI tokens. Meanwhile, Europe’s blockchain industry is seeking to overturn smart contract laws that could cripple Decentralized Finance (DeFi) operations.
Source: Coingape
