Nearly half of America’s 4,800 banks, according to the UK’s Telegraph on May 2, are “burning through their capital buffers.” The stock prices of American banks are also falling this week. The falls follow the federal authorities’ takeover of the First Republic Bank on May 1. Most of the bank’s assets and deposits will be taken up by JP Morgan Chase, the biggest bank in the United States.
The bond market and commercial real estate crashes in the United States have “collided with $9 trillion in uninsured deposits in the American banking system,” the research said.
According to Stanford University banking expert Professor Amit Seru, thousands of banks are underwater, he also said: “Let’s not pretend that this is only about Silicon Valley Bank and the First Republic. A sizable portion of the US financial sector may be bankrupt.
According to a study by Professor Seru released in April, more than 2,315 banks have assets now worth less than their obligations. The market value of assets held by the U.S. banking system is $2.2 trillion less than what their book value of assets, which accounts for loan portfolios kept to maturity, suggests.
The biggest banks in the United States are among these lenders, and one of them was referred to be a “globally systemic entity with assets of over $1 trillion.” Furthermore, the economy has not yet felt the full effects of the Federal Reserve’s monetary tightening. There has been an enormous buildup of debt, and according to some estimates, the total amount owed by the United States is a staggering $31.7 trillion.
The most recent collapse of American banks sparked the 2008 global financial crisis and gave rise to Bitcoin. Ironically, it could be the financial lifeline in the next banking catastrophe.
Crypto markets have modestly recovered this week as bank stocks have taken a battering. Over the past 24 hours, the total market capitalization has increased by 1.3% to $1.22 trillion.
Despite being up nearly 2% each on the day, BTC and ETH have been in a downtrend since the middle of April. Although trust in banks is progressively declining again, lessons from previous financial crises have not been learned. Bitcoin may resolve this time. But American financial officials may already know this, which explains why they’re determined to crush the cryptocurrency market.
