FDIC Says 63 Banks Faces Collapse, Bitcoin Price To Fall or Rise?

Federal Deposit Insurance Corporation (FDIC) Reports Financial Sector Concerns

The Federal Deposit Insurance Corporation (FDIC) has reported $517 billion in unrealized losses within the US banking system. This raises concerns about the stability of the US economy and financial sector.

ISM Manufacturing PMI Raises Recessionary Signals

The ISM Manufacturing PMI has fallen to 48.7, below forecasts of 49.6. This indicates a more significant-than-anticipated contraction in manufacturing, adding to concerns about an economic slowdown.

Bitcoin Price Surges Amid Interest Rate Cut Expectations

Bitcoin's price has exceeded $70,000 as the weaker manufacturing data increases the likelihood of interest rate cuts by the U.S. Federal Reserve.

63 Banks Facing Insolvency Amidst Credit Squeeze

Rising interest rates and delays in rate cuts have put pressure on US banks and businesses. The Federal Reserve Board's termination of the Bank Term Funding Program (FTFP) on March 11th has further heightened risk, particularly for regional banks.

The FDIC reports that 63 banks hold $517 billion in unrealized losses in Q1 2024, signaling a high risk of insolvency for the US banking system. These losses are attributed to rising funding costs, lower asset yields, and the impact of higher mortgage rates.

These concerns could destabilize the financial sector and the broader economy. "Unrealized losses on available-for-sale and held-to-maturity securities soared by $39 billion to $517 billion in the first quarter. The surge was driven by higher unrealized losses on residential mortgage-backed securities, a result of rising mortgage rates in the first quarter," the FDIC reported.

This marks the ninth consecutive quarter of unusually high unrealized losses since the U.S. Federal Reserve began raising interest rates in 2022.