Chaos brews in the US financial sector as banking stocks tank further, and experts claim a crypto moment is brewing. The Fed’s continuous interest rate hike to curb inflation isn’t helping matters.
The rising crisis sparked reactions from prominent analysts who weighed in on a possible bull run for crypto as the bank stocks tank.
The analysts believe the rising crisis presents an opportunity for crypto and bonds to shine. In recent tweets, prominent financial analysts, David Rosenberg, and Raoul Pal, think people should move to bonds and crypto now that banks are failing.
Banking Stocks Nosedive
The past few weeks have been chaotic in the United States banking sector as top banks collapsed in the blink of an eye. Although the crisis slightly impacted crypto after three crypto-focused banks collapsed, asset prices gained momentum, soaring higher in the days following the news.
this is pure madness- it’s literally time for a massive rate cut
US Regional Bank Stocks Today: 1. PacWest, $PACW: -30% 2. Western Alliance, $WAL: -25% 3. Metropolitan Bank, $MCB: -21% 4. HomeStreet, $HMST: -15% 5. Zions Bank, $ZION: -10% 6. KeyCorp, $KEY: -7% 7.…
— Afshine Emrani MD FACC (@afshineemrani) May 2, 2023
Many attributed the rallies to the lost confidence in bank stocks among investors. Most investors resorted to crypto as an alternative to the declining bank stocks, increasing market sentiment and pushing asset prices.
Bitcoin rallied over 40% in the weeks following the collapse of top US-based global banks. Bitcoin hit and exceeded the $28,000 mark for the first time since June 2022.
This price movement suggested the banking crisis could be a blessing in disguise for crypto. But, banks aren’t happy with the Fed’s refusal to surrender its hawkish inflation-curbing strategy amid a looming recession, as it affects their liquidity and stock prices.
Bonds and Crypto Rally Brewing, Says, Analyst
In a tweet, the founder and CEO of Global Macro Investor, Raoul Pal, took to Twitter to share his opinion.
The banks are suggesting that the Fed would be absolutely bananas to raise rates again… and add to that the risk of more noise around the debt ceiling and possible liquidity removal. They are walking a very tight rope…
Feels like a bonds + crypto moment brewing…
— Raoul Pal (@RaoulGMI) May 2, 2023
In Pal’s words, bonds and the crypto moment are brewing. The banks suggest that the Federal Reserve raising rates again and adding to the risk of increasing attention on the debt ceiling and liquidity removal is risky.
Another analyst, David Rosenberg, founder and president of Rosenberg Research and Associates Inc., also weighed in.
The only central banker to tighten into a banking crisis was Powell’s hero, Paul Volcker, in 1984 (Continental Illinois) and even then, the greatest inflation dragon-slayer of all time quickly reversed course and cut 150 bps. Buy bonds!
— David Rosenberg (@EconguyRosie) May 2, 2023
He complained about the US Fed’s adamancy towards the growing banking crisis as it continues hiking interest rates, asking his 234,000 followers to buy bonds.
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