• Three banks, Silvergate, Silicon Valley Bank and Signature Bank, recently collapsed due to various challenges.
• Economists have discovered that up to 190 US banks are currently at risk of collapse.
• Analysts conducted an asset exposure analysis to understand the effects of Federal Reserve moves on the banking sector’s financial stability.
Recent collapses of Silvergate, Silicon Valley Bank and Signature Bank were attributed to multiple regulatory actions, a bearish market in 2022 and losses in their respective operations.
At Risk Banks
Economists have discovered more than 186 banks in the United States could be at risk of collapse due to insufficient capitalization or high uninsured leverage. A recent report revealed that 10% of US banks currently have more unrecognized losses than Silicon Valley Bank had when it failed. If half of uninsured depositors move to withdraw from other banks, almost $300 billion of insured deposits will be at risk.
Effects Of Interest Rates Hike
Analyzing the effects of interest rates hike on the banking sector’s financial stability, economists found that there is a shortage of $2 trillion on the book value of assets making up for loan portfolios held to maturity. This suggests that if interest rates continue to rise, some banks may not be able to make their loan payments and face insolvency.
Ethereum Sharks Accumulated In Past Year
Data from Santiment reveals that Ethereum whales have been actively selling while smaller players have been accumulating over the past year. This suggests that smaller investors are confident about Ethereum long term potential and are looking for opportunities to enter at a lower price level compared with whales who prefer taking profits now instead of holding for longer periods.
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