BTC/USD fell as the S&P 500 lost 0.7%, data from Cointelegraph Markets Pro and TradingView showed.
The risk asset meltdown added more risk to U.S. regional bank stocks, with Pacwest Bancorp once again in the lead, down 50% on the day.
The embattled lender was already suffering huge losses, at the time of writing, down 86.5% year-on-year. In a statement, the bank described its position as “solid”.
As Cointelegraph reported, US authorities’ assurances about banking system stability appeared to many commentators at odds with reality, and confusion grew as the crisis continued.
In the last 24 hours:
1. PacWest Bank, $PACW, explores potential sale
2. Western Alliance Bank, $WAL, explores potential sale
3. First Horizon Bank, $FHN cancels merger with TD Bank due to “regulatory concerns”
4. The Fed Says “The Banking System Is Better.”
5. No comment from…
— Kobeissi Letter (@KobeissiLetter) May 4, 2023
“For the first time in weeks, equity markets are reacting to the banking crisis,” financial commentary resource The Cobici Letter wrote as part of its Twitter coverage.
Kobeisi argued that the latest Federal Reserve interest rate hike, confirmed on May 3 to 0.25%, added fuel to the fire.
“Perhaps it is the equity market that worries that the crisis may not be isolated,” it continued.
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“Fed rate hikes will only make things worse.”
In addition to PacWest, First Horizon and Western Alliance were the two other major losers, with 53% and 38% respectively.
“Confidence in a financial institution is built over decades and destroyed in days,” continued Bill Ackman, CEO of hedge fund management firm Pershing Square, in his own response.
“As each domino falls, the next vulnerable bank begins to shake. Until investors are paid for betting on the moving bank, there is no bid and the best sale is the closing price. We don’t have time to solve this problem.”
In a blog post dedicated to the crisis, meanwhile, Marty Bent, founder of crypto media firm TFTC, described it as a point of no return.
“Overall, things look absolutely dire for the US financial system. It looks like the end game,” he warned on May 3.
“I find it hard to believe that anything can be done to restore confidence in the system. No amount of backstopping, money printing, buybacks, consolidation, or world wars can put this genie back in the bottle. The Fed and Treasury will do their best to make the public believe otherwise, but it’s too much at once.
SPDR S&P Regional Banking ETF (KRE) 1-Day Candlestick Chart. Source: TradingView
The weekly chart underscores the significance of the $28,800 BTC price
Turning to Bitcoin, BTC/USD finds itself in an area of low liquidity at the time of writing, with large volumes of traders staying away.
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Data from Binance’s order book, which monitors resource material indicators and uploaded to Twitter, showed bid liquidity slowly increasing above $28,000.
As various popular traders called for a return to higher levels to give a shot at the $30,000 resistance, the longer term continued to be optimistic.
Popular trader and analyst Rekt Capital highlighted the current spot price levels as the site of a major recovery action.
“Last week, BTC closed above ~$28800 weekly. This week, $BTC has done well to keep it as support.
