The crisis that gave birth to Bitcoin could be repeated
Over the weekend, bad numbers from Credit Suisse and Deutsche Bank and a rise in CDS levels caused concern.
The global economy is not looking good, with record high energy prices due to increased tensions between Western countries and Russia, the highest inflation in 40 years in many countries, supply problems and serious falls in stock markets. Finally, problems at two of the world’s largest investment banks, Credit Suisse and Deutsche Bank, suggest that the crisis is likely to spill over into the banking sector.
Credit Suisse is being compared to Lehman Brothers
At the root of the concern is that Credit Suisse’s CDS has fallen to the CDS levels reached before the collapse of US bank Lehman Brothers in 2008. Credit Suisse CEO Ulrich Koerner said in a statement that the bank was going through a critical period and tried to reassure by saying that it had a strong capital base and liquid position. However, market commentators were not very satisfied with this statement.
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Among the criticisms, Credit Suisse and Deutsche Bank are said to have failed to manage the debt structure and non-performing loans. In addition, according to the latest outlook, Credit Suisse seems to be in a more difficult situation. Since the two banks have a combined asset base of $2.5 trillion, another concern is that a possible bankruptcy could have a bigger impact than the bankruptcy of Lehman Brothers, as the current asset base is 4 times the size of Lehman.
The comparison of the Credit Suisse crisis with Lehman Brothers has also turned the spotlight on Bitcoin. Bitcoin, which was launched after the Lehman collapse, was developed as a reaction to the current financial system with its founding mission.
Bitcoin is now more than 70% down from its last record price of $69,000. The technical outlook since June shows that the current lows have been maintained.
While an important catalyst for Bitcoin’s resurgence is expected, a possible banking crisis could accelerate the shift towards cryptocurrencies as an escape route for capital this time. However, factors such as risks arising from the internal dynamics of the crypto market and lack of regulation can also be considered as obstacles to cryptocurrency investment by individual and institutional investors. In short, it seems that the coming years will continue to be volatile for Bitcoin and cryptocurrency markets.
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