# KRE ETF Drops 36% in 2023, Rate Hike Shock Looms

> KRE ETF lost 36% in five weeks in 2023 as regional banks faced collapse risks. Another rate hike could trigger similar losses.
- Title: KRE ETF Drops 36% in 2023, Rate Hike Shock Looms | Shortify
- Summary: KRE ETF lost 36% in five weeks in 2023 as regional banks faced collapse risks. Another rate hike could trigger similar losses. KRE ETF dropped 36% in five…
- Keywords: kre, regional banks, fed rate hike, spdr s&p regional banking etf, market volatility, commercial real estate, deposit risk, banking sector, ETF, Drops, 2023, Rate
- Source: 24/7 Wall St. — https://247wallst.com/investing/etf/2026/09/21/kre-lost-36-in-five-weeks-in-2023-another-rate-hike-shock-may-be-coming
- Author: Omor Ibne Ehsan
- Published: 2026-09-21T19:25:00+00:00
- Read time: 1 min
- Topics: kre, regional banks, fed rate hike, spdr s&p regional banking etf, market volatility, commercial real estate, deposit risk, banking sector
## KRE ETF Decline
KRE ETF dropped 36% in five weeks from march to may 2023.

> KRE fell from $55.28 on march 1, 2023, to $35.50 by may 31, 2023
## Current Rate Hike
Fed raised rates to 4% on september 16, 2026, triggering new market concerns.

> On september 16, 2026, the federal open market committee raised the target range for the federal funds rate to 4 percent
## KRE's Structure
KRE is an equal-weight fund with concentrated risk exposure.

> KRE is an equal-weight sector fund, and the holdings show it
## Shared Bank Risks
All regional banks face deposit competition and credit cycle risks together.

> Every bank faces the same deposit competition, securities marks, commercial real estate exposure, and borrower credit cycle at the same time
## 2023 vs. Now
Uninsured deposits down, but securities losses remain from higher yields.

> Uninsured deposit shares at surviving regional banks have generally declined as customers spread cash across institutions and money-market funds
## Rate Hike Impact
A flatter yield curve may force banks to pay higher deposit rates.

> The 10-year minus 2-year spread has compressed to a quarter point, which offers little cushion above inversion
## What Happens Next
KRE's value depends on deposit behavior over the next two quarters.

> The deciding variable is deposit behavior over the next two quarters. If betas stay tame at the current fed range, the bull case holds
## Key takeaway

KRE ETF dropped 36% in five weeks in 2023 after regional bank failures; a new rate hike may cause similar market shocks.