Economic turmoil is slowly taking over the US soil. The Great Recession resulted from a housing bubble whereas the current scenario is becoming startup trouble, leading investors’ hope to a puddle. Moreover, the banking industry is taking a toll as a whole. Ray Dalio highlighted a ‘curve’ in his book, Principles for Dealing With Changing World Order, depicting the rise and fall of something. The economy is finally getting to the end of this curve.
The Chaos is Real
Charts show the First Republic Bank (NYSE: FRC) stock fell over 60% in the pre-market. Previously, The Coin Republic reported that more buying may come citing the bank’s statement regarding available capacity with the Fed. But the present conditions tell a different story. The company shares are plummeting, and a chaotic element exists.
Data shows that inflation in the US has reached a 40 year high. The collapse of the Silicon Valley Bank (NASDAQ: SVB) added fuel to fire as the company became the second largest financial crisis after the Lehman Brothers. The Silicon Valley-based bank was once considered as the best American bank according to Forbes, a US business magazine.
The bank saw a threefold growth from $61 Billion in 2019 to $189 Billion in 2021. Moreover, the startup friendly company became weaker amid the current market conditions which led their clients to withdraw their deposits en masse, leading the shares to plummet by over 60% on Friday. Ironically the Mecca of Startups has now been abandoned by their startup clients.
Moreover, Moody’s, a credit rating company, have reduced their ratings for the bank recently. CNBC reported that HSBC, a British multinational universal bank, is coming to SVB’s UK arm. Though the United Kingdom-based branch does not have a substantial number of clients, it can heavily impact a country’s economy if it fails. Additionally, the SVB’s balance sheet shows that the company has advanced almost 60% loans to venture capitalists. SVB stock price today was changing hand at $106.04 at publication time.
The regression trend shows that FRC stock broke last week, leading the price to a swinging low of $45. Relative strength index (RSI) indicates an oversold position currently, meanwhile, Moving Average Convergence Divergence (MACD) shows increasing seller dominance in the market. Average True Range (ATR) has risen exponentially, highlighting extreme volatility in company shares.
There’s cold anarchy brewing in the market, and it is likely that we see industry giants coming to the rescue. In a worst case scenario we are likely to see another bubble, but is so fa unknown of its aftermath.
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only, and they do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.
Source: www.thecoinrepublic.com
