The host of CNBC’s Mad Money, Jim Cramer, has said that technologies such as Bitcoin and PayPal are putting pressure on bank stocks despite the Federal Reserve announcing a rise in interest rates.

Several Possible Answers

Jim Cramer, the host of Mad Money was speaking last Friday on CNBC where he was trying to figure out why bank stocks were failing. A few of the reasonings he thought of included the fact that mortgage applications are dropping and that the Fed has yet to reveal its determination on stocks from JPMorgan Chase and Goldman Sachs.

In his opinion, though, they aren’t where the issues lie. He also said:

There are plenty of younger portfolio managers who think the banks are like Sears and J.C. Penney: they’re old-line brick-and-mortar stores that are about to lose their relevance thanks to all sorts of new technologies from Bitcoin, blockchain, PayPal [and] Square.

He continued by stating that it is companies such as PayPal that “may be a real part of the problem,” as they are doing away with the idea of banks. Such is the growth of the online payments system that it has morphed into more of an “online banking company that cooperates with everyone and has gone global,” said Cramer.

Not only that but when it comes to aiding the millions of unbanked people in the world, PayPal is delivering a viable solution. According to Cramer, Citi seemed to be vying with PayPal but has since pulled back, and even though Bank of America is reported as having the best online division, it fails to deliver on what PayPal is doing.

Potential Threats Lie in Bitcoin and the Blockchain

The Mad Money host mentions the fact that there are “potentially existential threats” in the way for the banking industry: the blockchain and cryptocurrencies. He added:

As I see it, they are the true reasons for the group’s underperformance and until the banks regain some visible earnings momentum, their stocks will not be able to get their groove back despite the additional hype that might be coming our way.

Interestingly, Cramer’s views come at a time when Bitcoin has been struggling with its price lately. At the time of publishing, the number one digital currency is trading at $6,470, according to CoinMarketCap. Last Wednesday, it had dropped to below $6,300. Yet, even though it has rallied slightly, it still has a long way to go to reach projected $60,000 price claims.

Do you think Bitcoin and the blockchain are putting pressure on bank stocks? Let us know in the comments below.

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