According to Binance data, the leading cryptocurrency Bitcoin 
$63,211 dropped by 5.3% to $105,231, and Ethereum 
$1,684 fell by 6.9% to $3,731 in the last 24 hours. This decline was primarily attributed to announcements from two US regional banks regarding bad loans. These developments have sparked a new wave of risk in the banking sector, inducing panic in both cryptocurrency and stock markets.
Concerns in US Banks Impact Wall Street
The US stock market closed with significant losses on Thursday, with the Dow Jones falling by 0.65%, the S&P 500 decreasing by 0.63%, and Nasdaq Composite down by 0.47%. According to reports, particularly distressing are the bad loan revelations by regional banks, escalating fears of potential chain risks in the credit market.
The announcement of a $50 million loan loss for Zions Bancorp and a lawsuit filed by Western Alliance Bancorp against a debtor on fraud charges intensified these concerns. Consequently, Zions’ shares plummeted by 13%, and Western Alliance’s shares dropped by 10.8%.
This tension in the credit market followed the recent bankruptcies of automotive credit companies First Brands and Tricolor Holdings. Jefferies, affected by its credit relationship with one of these companies, faced a 10.6% loss, marking its worst day since April. Experts warn that this scenario might represent the initial link in a potential chain of financial woes.
Rushing to Safe Havens: Gold Hits Record, Yields Fall
With a growing atmosphere of panic, investors are flocking to safe havens. Gold futures surged by 3.1%, surpassing $4,300 per ounce, achieving record highs, while silver also reached a new high with a 3.8% rise.
In the bond market, increased buying pushed the US 10-year Treasury yield below 4%, and the 2-year yield fell to 3.42%, its lowest level since 2022. Wall Street’s fear index, VIX, soared by 22.6%, reaching its highest level since May. CoinMarketCap’s Crypto Fear & Greed Index plunged into the “Fear” zone for the first time since April.
JPMorgan CEO Jamie Dimon issued a warning on Tuesday, stating, “Asset prices are very high, credit spreads are very tight. Falling from this height is dangerous.” He further added a cautionary note about carrying a $170 million risk from Tricolor’s bankruptcy, emphasizing that credit issues might become more prominent if a recession occurs.
