Credit Suisse is a world-renowned global bank that has existed for 167 years as the second largest bank in Switzerland. Recent bank crises have also affected Credit Suisse. In this article, we will examine the impact of the Credit Suisse collapse, and other bank collapses on the crypto market.
How Did the Credit Suisse Crisis Affect Crypto?
Last week was a week of bank collapses, de-pegs, and other crises. The collapse of such big banks victimized many investors and also put other investors in a state of anxiety.
The wave of panic started with the collapse of Silicon Valley Bank. Then the collapse of Signature and Silvergate banks added to the wave of panic. Following the collapse of such large global banks, shares of Swiss bank Credit Suisse fell 30%.
Why Did its Shares Fall?
Behind the decline in the shares of the Swiss-based bank, there is primarily a wave of panic. Many investors are panicked by bank collapses and want to secure their investments. Credit Suisse’s chief executive Ulrich Koerner said:
“This additional liquidity would support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs. Demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders. My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs.”
Another reason behind the decline is that Saudi National Bank, one of the bank’s largest shareholders, has firmly announced that it will not provide further support to Credit Suisse. Following the news, Credit Suisse shares, which were already on a downtrend due to other bank collapses, fell as low as $2.10.
Support from the Swiss Central Bank
Following the crisis, the Swiss central bank Swiss National Bank, and the Swiss Financial Market Supervisory Authority announced that they were ready to help Credit Suisse if necessary. It was also stated in the announcement that Credit Suisse did not face any liquidity problems.
This morning after the announcement, Credit Suisse announced that it would borrow $50 billion from the Swiss central bank. It can be said that the Swiss central bank has calmed the market a little bit. However, many investors are still hesitant.
Good News for Crypto?
Although the crises in the banking sectors have affected many crypto firms, they have not experienced a very high drop. On the contrary, news such as Binance’s move and Circle’s stablecoin recovery announcements relieved crypto investors.
With the banking crises, it’s possible that many traditional finance investors are switching to crypto. This has raised the question in the minds of crypto lovers: “Is a new bull coming?” Traditional finance investors were hesitant because they saw crypto as a more risky area. As a result of the events of this week, it was seen that traditional finance is not such a guaranteed investment area.
Bank Stocks Fall, Crypto Rises
In the wake of the banking crises, European bank stocks fell nearly 8%. As bank stocks fell, Bitcoin surged nearly 11%. Traditional financial investors, caught in the middle of the banking crises, moved their cash holdings into crypto. Managing Director at Wave Digital Assets Nauman Sheikh said:
“This is another example of a bank run that could definitely have a positive effect on crypto in the medium term, but short term, if the whole world is on a risk-off mode, I think [crypto] should follow down downwards as well”
Analysts attribute the survival of crypto despite the crises to the decline in trust in traditional finance.
Is a New Bull Market Coming?
A new bull in the crypto market depends on several different possibilities. Although investors’ confidence in the banking system is waning, the crackdown on crypto continues to make investors hesitant.
The Fed’s announcements could be positive for traditional finance once again. At this point, the statements from the Fed will be very important. The Fed may raise interest rates in order to fight inflation, or it may suspend the rate hike in order to calm the market considering the crises experienced.
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