Regional Bank Credit Woes Drag Bitcoin and Stocks Lower
U.S. stocks and Bitcoin (BTC) dropped Thursday as credit concerns in regional banks came into focus amid a slowing economy. JPMorgan CEO Jamie Dimon warned on the bank’s earnings call that “when you see one cockroach, there are probably more,” referencing the recent bankruptcies of First Brands and Tricolor Holdings. Mark Lipschultz, co-CEO of Blue Owl Capital, echoed the sentiment, urging banks to review their own books for hidden risks.
The fallout has hit the banking sector sharply. Jefferies (JEF), First Brands’ banker, has fallen 25% over the past month, including a 9% slide Thursday, though it says it can absorb any losses. Zions Bancorp (ZION) recorded a $50 million charge on troubled loans, while Western Alliance (WAL) filed a fraud lawsuit against a commercial real estate borrower. ZION and WAL fell 12% and 10%, leading regional bank declines.
Market Reaction and Bitcoin
The S&P 500 slipped 0.8%, while gold climbed 2.5% to near $4,300 per ounce as investors sought safety. Bitcoin acted like a risk-on asset, falling to $107,500 before recovering slightly to $108,000, down 3.2% in 24 hours and 11% over the past week. Previous crises—such as March 2020 and March 2023—showed BTC initially dropping alongside equities, but later benefiting from government and Fed intervention.
Signs of Potential Fed Support
Bond markets indicate expectations of monetary easing. The 10-year Treasury yield fell to 3.97%, and the two-year yield dropped to 3.42%, its lowest in three years. CME futures now suggest a 3.2% chance of a 50-basis-point Fed cut this month and an 11% chance of a 75-basis-point cut by year-end, signaling growing market anticipation that easing could provide a boost to Bitcoin and risk assets.
