The market capitalization of Bitcoin (BTC) has added $194 billion in 2023. Its 66 year-to-date (YTD) growth is vastly outperforming top Wall Street bank stocks, particularly as fears of a global banking crisis are rising.
Moreover, Bitcoin has decoupled from U.S. stocks for the first time in a year, with its price rising about 65 versus S&P 500‘s 2.5 gains and Nasdaq‘s 15 decline in 2023.
Wall Street banks lose $100B in 2023
The six largest U.S. banks — JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), Wells Fargo (WFC), Morgan Stanley (MS), and Goldman Sachs (GS) — have lost nearly $100 billion in market valuation since the year‘s start, according to data gathered by CompaniesMarketCap.com.
Bank of America‘s stock is the worst performer among the Wall Street banking players, with a nearly 17 YTD drop in valuation. Goldman Sachs trails with an almost 12 YTD decrease, followed by Wells Fargo (-9.75), JP Morgan Chase (1).
The U.S. banks‘ valuation has slid amid the ongoing U.S. regional banking collapse. That includes the announcement last week that Silvergate, a crypto-focused bank, was closing its doors and the subsequent takeover of Signature Bank and Silicon Valley Bank by regulators.
Related: Breaking: SVB Financial Group files for Chapter 11 bankruptcy
The crisis further expanded with the near-collapse of First Republic Bank, which was saved at the last moment through a $30 billion combined injection by Wells Fargo, JP Morgan Chase, Bank of America, Citigroup, and others.
Cyprus and Greece deja vu?
The rise of Bitcoin in the face of a growing U.S. banking crisis is similar to how it reacted during banking collapses in Cyprus and Greece.
BTC‘s price grew by up to 5,000 amid the Cyprus financial crisis in 2013, prompted by the exposure of Cypriot banks to overleveraged regional real-estate companies.
The situation was so dire that Cyprus authorities, in March 2013, closed all banks to avoid a bank run.
When Greece faced a similar crisis in 2015 and imposed capital controls on citizens to avoid a bank run, Bitcoin‘s price gained 150 during the period.
“Fears over the stability of the banking system, along with declining real interest rates, creates a good environment for Bitcoin to rebound," noted Ilan Solot, co-head of digital assets at London broker Marex, adding that the crypto "is seen by some investors as a hedge against systemic risks."
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.