Regional Bank Credit Concerns Weigh on Bitcoin and Stocks
U.S. stocks and Bitcoin (BTC) slid on Thursday as credit issues among regional banks surfaced amid a slowing economy. JPMorgan CEO Jamie Dimon warned on the bank’s earnings call that “when you see one cockroach, there are probably more,” referencing recent bankruptcies of First Brands and Tricolor Holdings. Blue Owl Capital co-CEO Mark Lipschultz urged banks to scrutinize their own portfolios for similar risks.
The banking sector took the hardest hit. Jefferies (JEF), First Brands’ banker, fell 25% over the past month, including a 9% drop Thursday. Zions Bancorp (ZION) posted a $50 million charge on troubled loans, while Western Alliance (WAL) sued a commercial real estate borrower for alleged fraud, with both stocks falling 12% and 10%, respectively.
Market Response and Bitcoin
The S&P 500 dipped just 0.8%, while gold surged 2.5% to near $4,300 per ounce. Bitcoin lagged, falling as low as $107,500 before recovering to $108,000, down 3.2% over 24 hours and 11% over the past week. Historically, events like the March 2020 COVID crash and March 2023 bank failures initially pressured BTC alongside equities, but subsequent government and Fed interventions triggered strong rallies.
Early Signals of Monetary Support
Bond markets are already hinting at potential easing. The 10-year Treasury yield dropped to 3.97%, and the two-year yield fell to 3.42%, its lowest in three years. Short-term futures at the CME now imply a 3.2% chance of a 50-basis-point Fed rate cut this month and an 11% chance of a 75-basis-point cut by year-end, signaling growing expectations for monetary support that could ultimately benefit Bitcoin and risk assets.
