Cointelegraph analyst and writer Marcel Pechman recently discussed how PacWest Bancorp’s plummeting share price and the ongoing banking crisis could impact Bitcoin. The bank holds $40 billion in assets, however, 80% of its lending portfolio has been assigned to commercial real estate loans and residential mortgages. The rising interest rates are the main issue. Meanwhile, the United States banks have a total underwater bond position of $600 billion, which is a significant number.
The U.S. Treasury has been bailing out every one of the latest three bankruptcies: Silicon Valley Bank (SVB), Signature Bank, and First Republic. The losses of SVB are estimated at $20 billion, or 15% of the total Federal Deposit Insurance Corporation (FDIC) capacity. As PacWest Bancorp faces significant challenges, Pechman explains how Bitcoin’s price should react in case it fails and why gold has recently flirted with its all-time high above $2,050. More importantly, Pechman also talks about how the banking crisis could impact government debt, which is spiraling out of control and could be extremely positive in the long run for Bitcoin.
Pechman further explains how oil prices are also impacted, as the energy commodity traded down 17.5% in just three weeks. The Organization of the Petroleum Exporting Countries (OPEC) doesn’t really control production and weakening demand for oil imports also played a key role. The potential oil demand flatline due to weaker economic conditions can be deemed a short-term negative driver for risk assets, including cryptocurrencies.
The banking crisis is a significant concern for everyone within the country, and there is no doubt that it will have an impact on the future of financial institutions. With the government debt spiraling out of control and the potential for Bitcoin and cryptocurrencies to emerge as a better option, it is clear that we are facing a time of significant change. It is important to keep an eye on how things are developing as there will undoubtedly be more changes and impacts in the future.
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According to https://cointelegraph.com/news/pacwest-bank-plummets-50-how-will-bitcoin-react
The material in this article is written on the basis of another article.