The recent banking crisis in the United States has negatively impacted selected stocks in the sector, with investors raising trust issues about the industry’s stability. With investors looking for alternatives, it seems Bitcoin is among the winners despite the asset being a relative newcomer in the broader financial scene.
In this line, data acquired and calculated by Finbold indicates that as of March 20, five leading U.S. banks have lost a cumulative market capitalization of $108.92 billion in 2023 alone. In comparison, Bitcoin has added $219.86 billion to its market cap during the same period.
Among the banks, Charles Schwab suffered the worst loss in capitalization, dropping from $155.42 billion to $105.33 billion. Bank of America has the second highest losses at $43.72 billion, followed by Wells Fargo at $15.74 billion, while JPMorgan Chase recorded an outflow of $4.59 billion. Only Morgan Stanley recorded gains, with $5.22 billion added to its market cap year-to-date (YTD).
A breakdown of the market cap movement shows that Bitcoin has gained 69.07% from $318.31 billion to $538.17 billion since the start of the year. Bitcoin has also dwarfed the banking giants regarding return on investment (ROI). On a year-to-date basis, Bitcoin’s return stand at 65.42%, while the average ROI of the banks is -11.64%.
Morgan Stanley has the highest ROI among the banks at 0.28%, followed by JPMorgan Chase at -5.17%, while Wells Fargo is third at -8.29%. Bank of America has the fourth worst losses at -15.26%, followed by Charles Schwab at -29.75%.
The research examined the possible drivers behind the variation in performance between Bitcoin and banking stocks. According to the research report:
“The banks have been affected by the general concerns of investors with trust issues in the banking system after the high-profile collapse of seasoned lenders, including Silvergate Capital, Signature Bank, Silicon Valley Bank, and the near collapse of Credit Suisse. Bitcoin is likely being considered by some investors as a hedge against systemic risks due to its decentralized nature.”
Overall, Bitcoin is likely to gain further if regulators slow down on interest rate hikes, which would likely bring stability to the banking sector stock.