Global markets at risk as Credit Suisse could go bankrupt

In less than a week, three U.S. banks failed: Silvergate Bank, Silicon Valley Bank, and Signature Bank. The last two represent the second and third largest bank failures in the country’s history. On top of that, there’s another factor driving market turmoil: the increased risk of Credit Suisse’s insolvency.

Credit Suisse is a Swiss company that has provided investment banking and asset management services since its founding in 1856. The company employs 50,110 people worldwide and has a market capitalization of $7.5 billion, according to its website and Companiesmarketcap.

This is why the increased risk of insolvency in the wake of the aforementioned bank failures and internal troubles at Swiss banks has added to market jitters. Stocks in various banks fell and assets such as gold and bitcoin (BTC), seen as a store of value, rose in price as distrust spread in the banking system.

But what would happen if the company, more than a century and a half old, did fail? How will this affect the world market?

According to asset strategist Ven Ram, if market fears come true, “the eurozone economy will fall off a cliff, upending the global financial system and stopping the screaming of major central banks tightening.”».

Regarding the size of Credit Suisse, the expert said that its assets under management last month were close to 1.3 trillion Swiss francs, equivalent to 1.4 trillion U.S. dollars. Such a figure “would be equivalent to nearly 10% of the 14.5 trillion euro zone economy,” he said.

Credit Suisse to be bailed out by government if it fails

Credit Suisse is “classified as systemically important” by the U.S. Financial Stability Board, Van Ram elaborated. That “means it’s too big to fail, because a collapse could trigger a financial crisis,” he said.

In this sense, once bankrupt, Credit Suisse is expected to be rescued by regulators, as is the case with Silicon Valley Bank and Signature Bank. As reported by CriptoNoticias, the U.S. government has released a plan to allow coverage of uninsured deposits at such banks.

“This quick support helped alleviate some of the worst fears of savers and investors” and “avoided a crisis looming over the financial sector,” Ram said. However, he believes it is unclear how the plot will play out in Europe.

Credit Suisse stock.

Shares of Credit Suisse are in free fall. Source: TradingView.

economist luis miguel ortiz emphasize The Swiss central bank is not as capable as the Federal Reserve (Fed). As such, he noted that a bailout of potentially bankrupt Credit Suisse is a more sensitive issue, with investors concerned about contagion to other banks.

“We’re going to have to wait and see what happens in the next few days, and above all we have to watch the ECB’s actions, which will wait for this week’s gains, and the market is sending a clear message that if it does that, it’s going to break something ,” Ortiz said.

As CriptoNoticias reported, it is for this reason that the market does not expect them to continue raising interest rates significantly. Otherwise, the banking crisis could worsen.

However, in Credit Suisse’s view, bankruptcy is currently out of the question.according to conveyed The company said on Jan. 15 that its capital and liquidity base is “very strong” and “exceeds all regulatory requirements.”

When in doubt what happens to this company, stock market, economy and cryptocurrency experts Alberto Iturralde Caution is advised. The important thing, he noted, is that if you have money, you should take it out, and if you can’t, buy stocks or other assets, such as investment funds.

Banking Crisis Fuels Bitcoin Bullish Sentiment

An expert with over 35 years of risk market experience also weighs in on the topic Greg Foss“If you think Silicon Valley Bank is causing some jitters in the credit markets, wait until Credit Suisse crashes,” he said. So he also suggested that regulators would have to bail it out if it went bankrupt to avoid a crisis.

In light of this, he pointed to “all roads lead to BTC,” a decentralized cryptocurrency that allows investors to self-custody their holdings without intermediaries such as banks. These characteristics, combined with its past and current price increases, conjure it up as “Crypto gold.”

“The more Bitcoin reacts positively to financial turmoil, the more it will gain legitimacy as true Crypto gold,” commented market analyst Miles Deutscher.

Bitcoin hit $26,000 this week, its highest level in six months. Source: TradingView.

This is why we could see a bullish trend for Bitcoin as Credit Suisse faces bankruptcy amid the US banking crisis.This is expressed by different traders such as Santino cryptocurrencywho expects the BTC price to hit $40,000 if the Fed low interest rate.

Source of information: Compiled from CRYPTONOTICIAS by 0x Information, the copyright belongs to the author, and shall not be reproduced without permission

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