Bitcoin stable as Credit Suisse, Deutsche Bank rumored to be on verge of collapse
Bitcoin has held steady amid rumors of bank failures, trading between $18,900 and $20,200 over the past three days.
Investors draw parallels between the plight of Credit Suisse and Deutsche Bank and the collapse of Lehman Brothers during the 2007-08 financial crisis.
Lehman Brothers, then the fourth-largest investment bank in the United States, filed for Chapter 11 bankruptcy after a significant asset devaluation and a plummeting stock price. A major factor in this was the company’s exposure to subprime mortgages.
To date, several recent events, such as the Bank of England (BoE) being forced to intervene in a £65bn bailout of bond markets, have signaled that the conventional financial system is on the brink of collapse. suggesting.
Investors turn to Bitcoin
Bitcoin’s price, meanwhile, is trading in a relatively stable pattern as stocks continue to fall amid macro turmoil.
During this period, analyst Dylan LeClaire noted a divergence between BTC and the S&P 500 around mid-September.
Recently, the safe-haven narrative has come to a standstill as Bitcoin closely mirrors the risk-on-price movement. However, in the last few weeks it has again claimed.
The significant surge in trading volume of the BTC/GBP trading pair on the day the BoE intervened in the UK bond market has prompted Brits to buy bitcoin as the central bank did not agree to shrink the balance sheet. suggesting that
Proponents argue that Bitcoin, which has a fixed supply of 21 million tokens, cannot depreciate or inflate to zero.
bank collapse
At the heart of Credit Suisse’s problem is the credit default swap (CDS). These refer to financial derivative instruments that allow an investor to exchange or offset his credit risk with another investor’s credit risk.
An analysis by the latest Weekly MacroSlate Report likened the current CDS market to what happened during the 2008 subprime crash.
“CDS are a good indicator of potential default. The higher the price of CDS, the higher the premium (higher chance of default).
Credit Suisse default insurance is now approaching the same levels seen during the collapse of Lehman Brothers.
However, the founder of the Lynn Alden Investment Strategy, Lynn Aldensays that while European banks are in trouble, bonds, currencies and energy will be big flashpoints in 2022.
There is a lot of social media talk about banking contagion, so I’m going to retweet it here.
The bigger economic and financial challenges in 2022 are centered around government bonds, currencies and energy. Except for some regions, they are not as predominantly banking as they were in 2008. https://t.co/xxIoTHfZLK
— Lynn Alden (@LynAldenContact) October 2, 2022
@knowerofmarkets He also called for downplaying the seriousness of the situation at Credit Suisse, saying the fact that it was widely debated suggested it “isn’t as bad as people make it out to be”.
This week is crucial for Bitcoin and the safe-haven narrative that has been tentatively re-established, as US salary data will be released on October 7th.