Nearly half of America’s 4,800 banks, according to the British Telegraph on May 2, are “burning their capital buffers”. Share prices of American banks also fell this week. The decline follows the takeover of First Republic Bank by federal authorities on May 1. Most of the bank’s assets and deposits will be taken over by JP Morgan Chase, the largest bank in the United States.
The bond market and commercial real estate crash in the United States have “collided by $9 trillion in uninsured deposits in America’s banking system,” the study said.
According to Stanford University banking expert Professor Amit Seru, thousands of banks are under water, he also said: “Don’t pretend that it’s just Silicon Valley Bank and First Republic. Most of the US financial sector may go bankrupt.
According to a study by Professor Seru released in April, more than 2,315 banks have assets that are now worth less than their liabilities. The market value of assets held by the US banking system is $2.2 trillion less than the book value of their assets, which takes into account portfolios of held-to-maturity loans.
The largest banks in the United States are among these lenders, and one is described as a “global systemic entity with over $1 trillion in assets”. In addition, the economy has yet to feel the full impact of the Federal Reserve’s monetary tightening. There has been a huge build-up of debt, and by some estimates, the total amount owed by the United States is $31.7 trillion.
The recent collapse of American banks precipitated the 2008 global financial crisis and gave rise to Bitcoin. Ironically, it could be a financial lifesaver in the next banking disaster.
Crypto markets have recovered modestly this week as bank stocks have taken a beating. Over the last 24 hours, the total market cap has increased by 1.3% to $1.22 trillion.
Despite up nearly 2% each on the day, BTC and ETH have been on a downtrend since mid-April. Although confidence in banks has fallen again, the lessons of previous financial crises have yet to be learned. Bitcoin can be settled this time. But American financial officials may already know this, which explains why they are determined to destroy the cryptocurrency market.