Bitcoin Decline Raises Concerns Amid Bank Instability

American regional banks plunge back into turmoil, reviving the specter of systemic instability. As markets react nervously, bitcoin retreats, but some already see it as an early sign. For players in the crypto sector, the asset anticipates a new liquidity crisis and upcoming monetary intervention.

Tensions on Banks : Bitcoin as a Barometer of Instability

While bitcoin is losing its retail investors despite historic highs, market attention focuses on two American regional banks: Zions Bank and Western Alliance, whose shares sharply dropped this week.

This decline occurs against troubled commercial loans, reigniting fears of persistent instability in the sector. Although banks strengthened their balance sheets after the March 2023 regional crisis, market confidence seems not to have been restored. For many observers, the previous crisis was never truly resolved but merely hidden behind emergency measures.

The current context reveals several weak signals fueling concerns of investors and analysts :

• Losses on commercial loans in several regional banks, notably Zions and Western Alliance, have revived insolvency fears ;

• A widespread loss of confidence in the regional banking sector, where stock market devaluations reflect deep market worry ;

• The controversial role of state guarantees put in place in 2023, accused of creating moral hazard by encouraging banks to take excessive risks ;

• A persistent structural fragility, pointed out by The Kobeissi Letter, which considers that banks today are supported more by implicit government guarantees than solid financial fundamentals.

Confused about what's happening with regional bank stocks?

Here's the real issue:

In March 2023, regional bank stocks collapsed, the crisis was "contained," but nothing really changed.

Banks who took outsized risk with either "backstopped" by the US government or acquired by…

— The Kobeissi Letter (@KobeissiLetter) October 16, 2025

These elements show that despite post-2023 reforms, the American regional banking sector remains vulnerable to shocks. A vulnerability that could degenerate into a liquidity crisis if the situation continues to deteriorate.

Bitcoin, an Early Indicator of a Latent Crisis?

Alongside banking tensions, bitcoin’s behavior intrigues. Strike CEO Jack Mallers spoke on the social platform Primal, stating that bitcoin “is detecting a problem”.

Remember, Bitcoin is the most sensitive to liquidity. It moves first. It’s a truth machine.

Yields are puking, spreads blowing out, and banks are stressed.

Bitcoin is working. It smells trouble.

When they’re forced to print, it’ll move first again, and outperform everything. pic.twitter.com/DoJPrkKG3m

— Jack Mallers (@jackmallers) October 17, 2025

He believes that “yields are collapsing, spreads are exploding, and banks are under pressure”. Furthermore, he continues : “bitcoin is working. It smells danger. When they are forced to print money, it will move first again and outperform everything else”. Mallers thus considers the flagship crypto to be most sensitive to liquidity and better anticipates than any other asset the movements of US monetary policy.

These statements were released just as bitcoin dropped to $103,850 due to Trump’s tariffs, its lowest in four months. An apparent paradox, which was nuanced by Arthur Hayes, BitMEX co-founder.

For him, this decline is only an opportunity. He stated on X : “BTC is on sale. If this US regional banking wobble grows to a crisis, be ready for a 2023-style bailout. And then, go shopping if you have spare capital”.

$BTC on sale. If this US regional banking wobble grows to a crisis be ready for a 2023-like bailout. And then go shopping assuming you have spare capital. I got my list, what’s on yours fam? pic.twitter.com/TbuQQI3njN

— Arthur Hayes (@CryptoHayes) October 17, 2025

Such a strategic reading anticipates an imminent monetary stimulus from the Fed, likely to benefit, as in 2020 or 2023, the crypto market.

These statements reflect a viewpoint shared by many players in the crypto sphere. In an environment where traditional banks lose credibility, bitcoin could again appear as an alternative safe haven. However, at this stage, nothing is yet decided. The current decline of BTC price also shows its vulnerability to market shocks and rapid investor arbitrages.