New York Community Bank, which acquired the majority of assets of Signature Bank, including 40 branch operations (excluding cryptocurrency deposits), suffered a significant loss of $252 million in Q4 last year, surprising the market. This led to a nearly 50% drop in the bank’s stock price in the past week and caused the KBW Nasdaq Bank Index to fall nearly 4% in the past week, with regional bank stocks generally declining, sparking concerns of a banking crisis.
The main reason for the bank’s loss in the last quarter was the deterioration of the US commercial real estate market. In response to the bad debt risks of commercial and real estate loans, New York Community Bank increased its provision for loan losses from $62 million to $552 million in the fourth quarter, more than ten times analysts’ expectations.
Although the bank’s management tried to explain this as a result of the bank’s assets surpassing $100 billion, requiring stricter liquidity requirements, it still made investors uneasy and prompted them to sell their stocks.
However, Federal Reserve Chairman Jerome Powell recently expressed optimism in an interview with CBS’s “60 Minutes” regarding the risk of a banking crisis. He stated that due to bad debts from commercial real estate loans, more small banks may fail or merge, but ultimately, this problem is manageable. He believes that a situation similar to the 2008 financial crisis, which led to the collapse of some of Wall Street’s largest institutions and hundreds of banks across the US, will not be repeated.
Arthur Hayes, co-founder of BitMEX, strongly disagrees with Powell’s remarks. Last week, he predicted that the unresolved issues in the banking system and the financial crisis of the banks could prompt the Federal Reserve and the Treasury Department to quickly implement financial assistance measures. At that time, he expects the price of Bitcoin to rise, following a similar price trend in March 2023.
During the banking crisis in the US last year, the Federal Reserve and the Treasury Department swiftly implemented relief measures, bringing confidence to investors. In contrast to the vulnerability of centralized finance highlighted by the collapse of traditional banks, Bitcoin surged 23% from $19,549 to over $29,000 in March last year.
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