Despite Federal Reserve Chairman Jerome Powell's attempts to quell any concerns about stability within the US banking system, investors were left in shock following a prompt after-hours trading collapse across several major US regional banks. Markets speculated that the plummet could have been caused by the news that PacWest Bancorp, one of the US's leading regional banks, is exploring potential strategic options, citing people familiar with the matter.

The other biggest casualties were Western Alliance Bancorp, Metropolitan Bank and HomeStreet, which made losses in the double figures. Metropolitan Bank had previously offered services to crypto firms, however discontinued its digital asset vertical in January as it wasn't content with the direction that the cryptocurrency industry was developing. Western Alliance Bancorp integrated blockchain-based payment solutions, however the financial institute presents yet another example of the volatile decisions made by banks.

In spite of Powell's prior statements the banking sector was 'sound' and 'resilient' before the market crash, nobody could deny the metrics of the sell-off, with PacWest Bancorp experiencing a significant 52.5% reduction that set to wipe out around $340 million from its market cap. People jumped to conclusions and Crypto Twitter soon took the opportunity to mock the Chairman, with Will Clemente, the founder of Reflexivity Research making reference to the collapse of five banks and declaring that this was “not a particularly sound and resilient banking system...”

Perhaps the most confronting visual representation spread further by Crypto Twitter was the collection of assets compiled by “zerohedge” [Twitter user] showing the dramatic wipe out of $500 billion from bank failures in just four weeks. In addition, a recent article from the Federal Reserve also warned of the risks posed by “stablecoins”, which refer to digital assets that are pegged to a fiat currency, and the potential for “bank runs” like a cash version of the bitcoin blockchain.

In the midst of all this, with no semblance of security or trust in the banking sector, it's unsurprising investors are increasingly looking to crypto as an alternate form of investment. Don't be surprised if investors are questioning the value proposition of fiat currency, as the trend continues and faith in traditional banking institutions lingers in limbo.



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