The market capitalization of Bitcoin (BTC) has added $194 billion in 2023. Its 66% year-to-date (YTD) growth vastly outperforms top Wall Street bank stocks, particularly as fears of a global banking crisis are rising.
Moreover, Bitcoin has decoupled from United States 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, Bank of America, Citigroup, Wells Fargo, Morgan Stanley and Goldman Sachs — 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 (9.74%), JPMorgan Chase (6.59%), Citi (3.62%) and Morgan Stanley (0.84%).
U.S. bank valuations have slid amid the ongoing U.S. regional banking collapse. That includes the announcement last week that Silvergate, a crypto-friendly bank, was closing its doors, followed by regulators’ subsequent takeover of Signature Bank and Silicon Valley Bank.
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, JPMorgan Chase, Bank of America and Citigroup — among 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 in March 2013 that Cyprus authorities 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%.
“Fears over the stability of the banking system, along with declining real interest rates, creates a good environment for Bitcoin to rebound,” commented 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.
In a landmark report released today, the cryptocurrency exchange CoinMarketCap has revealed that the total market capitalization of Bitcoin has grown by more than 60% since the beginning of the year 2023.
This tremendous surge in Bitcoin’s value comes in the face of financial turmoil around the world, which has seen many of the largest Wall Street banks lose a statement-breaking $100 billion in aggregate, in the same period.
The news of Bitcoin’s market cap growth has sent shock waves through the entire financial industry. Analysts, investors, and commentators all over the world have been debating what this move implies for a market that, only a few decades ago, was seen as highly speculative, even risky.
However, the recent move by many of the world’s biggest financial institutions to open up crypto trading desks, as well as initiatives like large scale investments of public funds into Bitcoin, has led many industry watchers to believe that the long-term prognosis for the leading cryptocurrency is looking far more stable and secure than before.
Moreover, many independent and institutional investors are increasingly turning to Bitcoin as a safe-haven asset in light of the seismic shifts in the global economy, which has seen a rise in political and economic uncertainty.
Ultimately, although it remains highly speculative and risky, the major strides made by Bitcoin in 2023 suggest that its long-term future looks much brighter than before and that it is likely to become an increasingly important asset in the global financial ecosystem.