If Over 2,300 Banks In America Are Bankrupt, Will Bitcoin Break Above $40,000?
May 07 2023 - 9:41PM
NEWSBTC
The United States banking system is in trouble as over 2,300
financial institutions could have more liabilities than assets,
recent analysis reveals. Subsequently, analysts say this could
boost Bitcoin prices in the weeks and months ahead if the
government doesn’t proceed carefully. US Banks Burning Through
Capital Buffers The US Treasury and Federal Reserve say that the
problems are peculiar to just individual banks, but experts are
warning that the situation is much worse than the government
admits. With the anti-inflationary measures in place, almost half
of America’s 4,800 banks are burning through their capital buffers,
and there is still more tightening to come from the Fed. Related
Reading: Bitcoin Struggles To Break $30,000 Resistance Level:
Here’s Why The full effect of monetary tightening by the Fed has
yet to hit the economy, and only then would experts know whether
the United States financial system will be able to safely deflate
the excess leverage induced by extreme monetary stimulus during the
pandemic between 2020 to 2021. The White House did not offer a
blanket guarantee for all deposits because that would look like
social welfare for the rich. Besides, the Federal Deposit Insurance
Corporation (FDIC) reportedly has only $127 billion of assets and
may require its own bailout. For that reason, financial
institutions are now pressuring the United States Securities and
Exchange Commission to crack down on short-selling strategies that
profit when bank stocks slide. Lindsey Johnson, CEO of the Consumer
Bankers Association, urged policymakers to take a serious look at
the financial havoc wreaked by short-sellers. Bank Failures Could
Drive Bitcoin Prices The turmoil in the banking industry is a
concern for the Biden administration. If thousands of banks in the
United States were to fail, it is possible that some investors
could turn to Bitcoin as a way to protect their assets. With the
Biden administration’s stance on cryptocurrencies, any action that
places the banking system in jeopardy could drive Bitcoin prices
higher, even above $40,000. The SEC is not currently contemplating
any ban on short-selling bank stocks, according to a senior agency
official. In 2008, the SEC called time-out on short-selling on
nearly 1,000 financial stocks in a bid to restore faith in public
markets. However, the New York Fed later found that the ban
did little to stem the financial stock market that was flaying out
of control. Related Reading: Bitcoin Miners Reap Profits As Mining
Difficulty Hits 3-Month Low Another study discovered that most of
the stocks protected by the ban lost the citizens’ confidence,
suffering “a severe degradation” in market quality, price impact,
and volatility. As financial institutions press the SEC to take
action against short-sellers, and their role in the market, which
is impacting Americans’ confidence in the financial system. Yet,
any careless moves to pull the pin could create more fissures,
possibly buoying crypto and bitcoin prices. Feature Image From
Canva, Chart From TradingView
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