May 04, 2023
US Regional Banks Plunge Despite Powell’s Optimism
The stock market was thrown into disarray on May 3rd after the share prices of several United States regional banks tanked in after-hours trading. This occurred despite Federal Reserve Chairman Jerome Powell’s assurance that the banking sector was “sound” and “resilient” just hours before.
PacWest Bancorp, one of the hardest hit banks, fell a whopping 52.5% in after-hours trading. Bloomberg reported that the bank would explore strategic options on May 4th, leading some to speculate that another bank may be on the brink of a U.S. banking crisis. According to people familiar with the matter, the bank is considering a sale or capital raising.
Other regional banks that were affected include Western Alliance Bancorp (22.4%), Metropolitan Bank (16.2%), and HomeStreet (7.8%). Metropolitan Bank had previously offered services to crypto firms, but closed its digital asset vertical in January due to dissatisfaction with the direction of the cryptocurrency industry. Western Alliance Bancorp, on the other hand, integrated blockchain-based payment solutions for its clients from its blockchain and digital asset branch.
In response to the after-hours trading, Powell announced that the Federal Reserve would hike interest rates another 25 basis points. He added that the Fed was “committed to learning the right lessons from this episode, and we’ll work to prevent events like these from happening again.”
The collapse of First Republic Bank was the second-biggest bank failure of late. The news of a government receivership on April 26th caused the bank’s share price to plummet 20% in hours. This has caused many on Crypto Twitter to mock Powell for his statement that conditions in the banking sector “have broadly improved” since early March.
Will Clemente, the founder of digital asset analysis firm Reflexivity Research, tweeted to his 680,300 Twitter followers that the collapse of five banks — SVB, Silvergate, Signature, First Republic and PacWest — “sounds like a very sound and resilient banking system…” Twitter user Zerohedge also made fun of Powell, noting to the 1.6 million followers that over $500 billion has been wiped out from “bank failures” in the past month alone.
The 52% fall of PacWest Bancorp is set to erase approximately $340 million from its market cap, which was $772 million at the close of May 3rd, according to Google Finance. These events have caused many to question the stability of the banking sector and the security of their investments.
The banking crisis has also opened up the web3 space to new opportunities. For example, NFT marketing agencies are now popping up to help crypto firms use NFTs to promote their products and services. Twitter NFT marketing is also becoming more popular, with more companies turning to the social media platform to sell NFTs and promote their businesses. Web3 agencies are also becoming more prominent, providing services to help crypto firms navigate the web3 space. It remains to be seen how these new developments will affect the banking sector in the long run.Disclaimer: All investment or financial opinions expressed by MoonLanding Media are not recommendations and are intended for entertainment purposes only. Do your own research prior to making any kind of investment. This article has been generated based on trending topics, has not been fact checked and may contain incorrect information. Please verify all information before relying on it.