Rising inflation and the tightening of monetary policy by the US Federal Reserve are the drivers.
On April 12, major U.S. financial institutions such as JPMorgan and Wells Fargo reported a 4% decline in quarterly net interest income. This figure represents the difference between what banks earn on their assets and what they pay to their customers. This issue reflects the challenges that smaller banks have faced in 2023, as noted by Yahoo Finance.
JPMorgan Chief Financial Officer Jeremy Barnum noted that customers are moving away from traditional savings accounts and toward higher-yielding alternatives like certificates of deposit (CDs). This change partly explains why JPMorgan's stock fell 5.7% on April 12, despite a 6% year-over-year increase in net profits for the first quarter. Additionally, JPMorgan CEO Jamie Dimon highlighted the risks posed by geopolitical tensions and the Fed's new quantitative tightening.
The main reason for the current slowdown in stock markets is persistent inflation, which prompts the central bank to maintain higher interest rates, thereby reducing liquidity. However, this scenario could be seen as inherently positive for Bitcoin because, like gold, the cryptocurrency benefits from being a scarce asset. Gold hit an all-time high of $2,431 on April 12, but that alone didn't stoke market concerns.
On April 10, the yield on the 5-year U.S. Treasury note rose to its highest level in five months, signaling investor dissatisfaction with yields below 4.5% in light of the inflation outlook. This situation has two major repercussions...
