Financial Markets at Risk: Impending Giant Credit Crunch Threatens Investor Confidence
During a recent On the Margin podcast, Julian Brigden, co-founder of Macro Intelligence 2 Partners, drew parallels between the current financial situation and a fictional character's overconfidence.
He points out that the belief in a ‘no landing’ or ‘soft landing’ is reminiscent of the character’s overconfidence in his survival.
Brigden’s Warning about Complacency in Financial Markets
Brigden believes people have become complacent, citing the 400 basis points of rate hikes, a strong equity market, and robust business earnings that made people feel invincible.
However, Brigden warns that monetary policy works with a lag and will soon take effect.
Brigden predicts that the markets have not yet felt the full impact of the collapse of SVB and subsequent contagion.
The impact of the collapse of SVB on the crypto banking sector
Banks that were supportive of cryptocurrencies, such as SVB, Silvergate, and Signature, experienced a significant downturn partly due to the sudden increase in Federal Reserve interest rates, resulting in a massive imbalance in their financial statements.
Brigden believes the credit crunch issue is not limited to the crypto banking sector but has affected all market segments. This has put the crypto banking industry in a vulnerable position. It remains to be seen next month whether the true extent of the situation will be revealed.
READ MORE: Bitcoin’s Potential as a Safe Haven Asset: Bloomberg Analyst Shares his Perspective
He says that credit cycles lead the economic cycle and that the idea of not having a credit cycle was ridiculous. Despite the Federal Reserve’s efforts to avoid an impact, Brigden argues that the boost is pumping inflation, and there is no greater proof that fundamentals do not count when it comes to asset prices than COVID.
Brigden’s View on Credit Cycles and the Banking System
Brigden argues that the banking system operates deceptively by lending out more money than it has on hand to repay depositors. When the central bank raises short-term interest rates, and the yield curve flattens, banks struggle to lend money profitably, which decreases their profit margin.
This, in turn, triggers a credit cycle that tightens credit and can lead to a freeze in lending. Banks are deterred from taking on the risk due to insufficient reward, thus tightening the credit cycle.
Brigden believes that the collapse of SVB was already happening before it occurred and that there were leading indicators that predicted it. He warns that it’s still coming.
Alexander Stefanov
Reporter at CoinsPress
Alex is Editor-in-Chief of Coinspress and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.
