In less than a week, three US banks closed: Silvergate Bank, Silicon Valley Bank and Signature Bank. The latter two represent the second and third largest bank failures in the country’s history. Added to this panorama was another factor that caused turbulence in the markets: the risk of bankruptcy of Credit Suisse was growing.
Credit Suisse is a Swiss company that has been offering investment banking and wealth management services ever since was founded in 1856. The company says it has 50,110 employees worldwide and a market capitalization of $7.5 billion website and data from CompanyMarket Cap.
For this reason, the increased risk of bankruptcy following the closure of the aforementioned banks and internal problems at the Swiss bank increased the nervousness of the markets. Shares in various banks declined amid growing distrust in the banking system and store-of-value assets such as gold and bitcoin (BTC). they have increased in price.
But what would happen if this company with more than a century and a half of history actually went bankrupt? How would that affect the world market?
So the wealth strategist Come Ramif this market fear materializes, “the eurozone economy will fall off a cliff, will turn the world financial system upside down and it will stop clamoring about tightening policy by major central banks.
To put the dimension of Credit Suisse in perspective, the specialist indicated that assets under management were almost 1.3 trillion Swiss francs last month, equivalent to 1.4 trillion dollars. Such a number “would represent almost 10% of the €14.5 trillion economy,” he said.
Credit Suisse would be bailed out by the government if it failed
Van Ram explained that Credit Suisse “is classified as systemically important by the United States Financial Stability Board.” That means it’s too big to failas a collapse has the potential to trigger a financial crisis,” he said.
With that in mind, one might assume that in the event of bankruptcy, Credit Suisse could be bailed out by regulators, as was the case with Silicon Valley Bank and Signature Bank. As CriptoNoticias reports, the United States government has launched a program that makes it possible to protect the uninsured deposits of such banks.
“This swift support has helped allay some of depositors’ and investors’ worst fears” and “staved off a crisis that is looming over the financial landscape,” Ram said. However, he felt that it was not clear how the storyline might develop in Europe.
The economist Luis Miguel Ortiz stressed that the capacity of the Swiss central bank is not like the US Federal Reserve (Fed). As such, he pointed out that a bailout for Credit Suisse’s potential bankruptcy was a more sensitive issue and Investors fear the contagion effect on other banks.
“We’ll have to wait and see what happens in the coming days, and most importantly, we’ll have to watch what the European Central Bank is doing, which is waiting for the rate hike this week and sending the market a clear message that it’s breaking something,” Ortiz said.
For this reason expect markets do not increase further Interest rates aggressive, as reported by CriptoNoticias. Otherwise, the crisis for the banking industry could worsen.
However, from Credit Suisse’s point of view, insolvency is currently not possible. Accordingly communicates The company on January 15, its capital and liquidity base “is very strong” and it “exceeds all regulatory requirements”.
If you have doubts about what will happen to this company, stock exchange, economics and cryptocurrency specialist Alberto Iturralde recommended to be careful. He noted that it is important If you have money there, you should withdraw it or, if you can’t, buy stocks or other assets like mutual funds.
The banking crisis is fueling bullish sentiment for Bitcoin
The specialist with more than 35 years of experience in risk markets also commented on this topic Gregory Foss. “If you thought Silicon Valley Bank caused some uneasiness in credit markets, wait until Credit Suisse collapses,” he said. Hence, he also suggested that if it went bankrupt, regulators would have to bail it out to avoid a crisis.
With that in mind, he pointed out that “all roads lead to BTC,” a cryptocurrency that is issued in a decentralized manner and allows investors to hold their holdings themselves without intermediaries like a bank. These features that add to the rise in price it has had in the past and these days, raised it Imagination that it is “digital gold”..
“The more often Bitcoin reacts positively to financial turmoil, the more legitimacy it will claim as real digital gold,” commented market analyst Miles Deutscher.
With Credit Suisse looming bankruptcy amid the banking crisis sweeping the United States, We could see an uptrend for bitcoin. This was supported by various dealers such as e.g SantinoCryptowho predicts that BTC price will hit $40,000 if the Fed low Interest charges.