As Bitcoin continues to rise, the situation of banks attracts attention. Accordingly, the decrease in deposits is noteworthy. As announced in the 3rd quarter 2023 report, Charles Schwab is one of the financial companies most affected by the decline in customer deposits brought about by the rising interest rate environment in the United States.
There are challenges for Charles Schwab as Bitcoin rises
Bitcoin attracted attention by passing the 30 thousand dollar band the other day. However, this does not indicate an increase for the other financial sector. This situation brings with it difficulties. It poses a significant challenge for a company that relies heavily on customers’ uninvested cash to fund its interest-earning businesses. Charles Schwab’s consumer bank deposits fell 28% compared to the same period the previous year. Accordingly, it caused net interest income to decrease by 23.5% in the third quarter. This resulted in a decrease of 16.2% compared to the second quarter. It also negatively affected its quarterly revenue, which stood at $4.61 billion.
A recent Twitter post by event-driven trader Gurgavin Chandhoke stands out. Accordingly, it draws attention to Charles Schwab as the financial company with the most significant cumulative losses on bank deposits since the 3rd quarter of 2022.
Charles Schwab’s stance on Bitcoin and crypto
It is noteworthy that the US financial giant has a skeptical attitude towards Bitcoin and the cryptocurrency market. Charles Schwab does not offer these digital assets on the spot market, although it does offer alternative ways to speculate.
Schwab Center for Financial Research included Bitcoin BTC in an article dated 2022. Accordingly, he has clearly stated that it lacks the necessary features to be a global currency, a reliable store of value or an inflation hedge like gold. In this context, Charles Schwab sees Bitcoin as a completely speculative asset. He also advises investors to do so by using funds outside of a traditional long-term portfolio.
BTC’s performance
However, when we look at Kriptokoin.com, Bitcoin has experienced a 55.5% increase in value since October 21, 2022. It is also trading at $29,804 at the time of writing. By contrast, Charles Schwab stock (SCHW) is down more than 25% both in the last quarter and this year. Accordingly, this coincides with the positive price performance of Bitcoin. SCHW is currently trading at $50.87 per share. It was also $68.19 per share three months ago. On the other hand, on October 21, 2022, it was $68.26 per share.
Walter William Bettinger, CEO and Co-Chairman of Charles Schwab, speaks on the subject. Accordingly, he draws attention to the situation of the Federal Reserve, which slows down inflation. However, he says that there is a significant cost to markets, consumers and investors. He similarly expresses concern about his actions coming at a significant cost to firms like Schwab. These difficulties are emphasized by the warnings of JPMorgan CEO, who describes the period we are in as the ‘most dangerous period’. As a result, Charles Schwab faces challenges with rising interest rates. The challenge comes in the changing financial environment influenced by evolving attitudes towards cryptocurrencies such as Bitcoin.
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