JAKARTA - Shares of US banks have experienced the fastest decline since the closing of Silicon Valley Bank, while Bitcoin prices have recovered on Tuesday, May 2, 2023. This incident comes after California's financial watchdog took over First Republic Bank on Monday. The 84 bank branches will reopen under JP Morgan Chase.
California-based PacWest Bancorp experienced a 27 percent drop in stock in a day from $8.90 (Rp130 thousand) to $5.50 (Rp80,900). Not only that, Arizona-based Western Alliance Bancorporation fell by 20.53 percent, from 36.18 US dollars (Rp532 thousand) to 28.96 US dollars (Rp441.00).
Other banks such as Zions and Comerica also fell by about 10 percent. This is the biggest loss the banks have suffered since mid-March, when Silicon Valley Bank and Signature Bank fell on March 10 and 12.
PacWest, Western Alliance, and other banks suffered losses as customers seek greater safety in larger banks or higher returns on money market funds. First Republic lost its largest deposit in the first quarter of 41 percent, while PacWest and Western Alliance lost 17 percent and 11 percent of their respective deposits.
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Finance Minister Janet Yellen previously gave different signals about whether her department and the Federal Reserve would agree to guarantee deposits on small banks, as she did with the Silicon Valley Bank in March.
Yellen previously indicated that the government would only guarantee banks that were deemed to pose a "systemic risk" to the banking system, thus inviting criticism that it could see customers flee from small banks towards large companies that benefit and are protected.
Arthur Hayes, founder of BitMEX, predicts that PacWest will be the next bank to fall and enter into the supervision of the Federal Deposit Insurance Corporation.
By the time Silicon Valley Bank crashed in March, Hayes became more bullish towards Bitcoin, which saw the asset price soar from US$20,000 (Rp294 million) to US$28,000 (Rp412 million) per coin at the time.
The price of Bitcoin itself rose from $28,000 to US$28,566 (equivalent to Rp420 million) per BTC on Tuesday. The decline in bank shares comes amid the recovery of Bitcoin prices, which could be a signal for investors to consider investing in crypto assets as an alternative to traditional financial instruments.
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