Bitcoin has been experiencing a bullish run for the past few months, and the recent merger between UBS and Credit Suisse has added more fuel to the fire. The event led the crypto to hit values not seen since June 2022.
The UBS-Credit Suisse Merger
On Sunday, UBS announced that it would acquire its embattled domestic rival Credit Suisse for 3 billion Swiss francs (around $3.2 billion in present exchange rates) as part of a government-backed, 60% discounted deal. This decision came amid fears of contagion to the global banking system after two smaller US banks collapsed in recent weeks.
Switzerland’s second-largest bank with 166 years of history in the industry, Credit Suisse, has been facing a series of crises that have led to a sharp decline in its shares. The bank has been embroiled in scandals over the years, including multi-billion-dollar losses and uninspiring strategies.
The issues were exacerbated in 2021, following losses associated with the failure of investment funds Archegos and Greensill Capital. In 2022, top management changes also caused problems for Credit Suisse.
Following the resignation of its former CEO Antonio Horta-Osorio in 2021 stemming from his violation of COVID-19 restrictions, the new CEO Ulrich Koerner’s strategic review in January 2022 was not well-received by investors. Consequently, rumors of an impending bank failure prompted clients to panic and withdraw billions of Swiss francs.
In the impending fallout, the bank’s biggest backer, Saudi National Bank, said it could not give any more money to Credit Suisse due to regulatory constraints. As a result, the Swiss bank considered borrowing up to $54 billion to keep its liquidity afloat before the UBS merger came into play.
Bitcoin Price Surge
Prior to the merger, Bitcoin was already climbing up in value amid the ongoing bullish sentiment in the cryptocurrency market coupled with the increasing mainstream acceptance of cryptos and the perceived instability of the traditional banking systems in the world’s major markets. Shortly after the announcement of the UBS-Credit Suisse merger, BTC soared above $28,500, which was the first time it had reached such a level since June 2022.
The coincidence is just too hard to ignore but the merger between UBS and Credit Suisse definitely had a positive impact on Bitcoin. The event reinforced the cryptocurrency’s position as a safe-haven asset and it’s a good illustration that no bank is too big to fail in the traditional financial system.
With concerns about the stability of traditional banks and fiat currencies, investors are turning to Bitcoin as a viable alternative investment. Bitcoin’s limited supply, its decentralized nature, easy exchange compared to gold, and the increasing mainstream adoption of cryptocurrencies are all factors contributing to its growing popularity as the best hedge or alternative store of value in the digital age.
Bitcoin’s price surge is certainly a testament to the increasing inverse correlation between traditional financial markets and cryptocurrencies. The merger between UBS and Credit Suisse, two of the largest banks in Switzerland, has demonstrated the interconnectedness of the global financial system and the impact that events in the traditional financial markets can have on cryptocurrencies.
As the world continues to brace and navigate around the challenges of an uncertain financial landscape, the role of cryptocurrencies such as Bitcoin in providing a stable and secure store of value is becoming increasingly important. The UBS-Credit Suisse merger is just one example of the many events that are shaping the future of both traditional financial markets and cryptocurrencies, and it is clear that the two are becoming increasingly intertwined.
As such, it is essential for investors to consider the impact of events in the traditional financial markets when making decisions about their cryptocurrency investments in addition to their technical analyses.
Giancarlo is an economist by profession with a career spanning nearly two decades. His professional journey has seen him assume vital roles in various government and private organizations such as the Department of the Interior and Local Government (DILG), the National Economic and Development Authority (NEDA), Megaworld Corporation, and the China Banking Corporation in the Republic of the Philippines.
In addition to his civic and corporate pursuits, his forward-thinking approach has led him to manage several prominent websites in the banking and finance sector, notably the Australia-based RateChoice, where he immersed himself in the world of emerging financial technologies and where he found particular interest in Bitcoin all the way back to 2013.
Prior to his addition to Blockzeit’s dynamic team, he held an essential role as Project Manager for initiatives encompassing blockchain, stablecoin, mining, special economic zone development, and iGaming. This noteworthy chapter in his career unfolded under the auspices of InPlan Consultancy Services, Inc., the think-tank of IMPERO Consortium Management Corporation headquartered in Manila, Philippines, and Tokyo, Japan. InPlan, led by a distinguished retired Cabinet member of the Philippines, collaborates directly with IMPERO’s core management team, contributing to strategic planning and business development endeavors.