Bitcoin Price Surges As First Republic Bank Shares Crash• April 29, 2023 11:17 am • Comments
It looks like the fears of a banking crisis are still alive as many are speculating about a possible bank failure of First Republic Bank.
Shares of the bank have crashed by nearly 50% since April 25 and the crypto market happens to be surging at the same time.
In fact, the price of Bitcoin had surged by around 3% in the 24 hours after the news was released which is the same thing that happened during the Silicon Valley Bank failure.
It is now expected that the government will once again assist the bank with some sort of financial assistance in order to stabilize the bank.
This concerns of a bank failure come even after JP Morgan and Bank of America had deposited $30 billion at the troubled bank.
According to multiple reports, First Republic Bank could be taken over by the Federal Deposit Insurance Corporation (FDIC). https://t.co/x6ZveVugpF
— Bitcoin News (@BTCTN) April 29, 2023
On March 26, Bloomberg reported that U.S. authorities were looking at creating an emergency lending facility to assist the bank in shoring up the ”structural challenges” with its balance sheet.
According to anonymous sources at the time, despite First Republic staring down the barrel of liquidity concerns, U.S. officials declared the bank’s deposits were “stabilizing,” and it was not at risk of experiencing “the kind of sudden, severe run” that led regulators to close down Silicon Valley Bank.
Unfortunately, these reassurances have proven incorrect.
On Monday, April 23, First Republic reported in its first quarter earnings call that total deposits had plummeted by more than $100 billion and it would be “pursuing strategic options” to strengthen its financial standing as quickly as possible.
It also looks like the bank is laying off an expected 20 to 25% of its workforce in Q2 of this year which indicates a weak balance sheet.
So far, a decision has not been made between the government and the private sector yet, but it is clear that such incidents are a strong example of why crypto like Bitcoin is essential.
Data is now showing that Bitcoin and the S&P 500 are becoming increasingly decorrelated as time goes on due to their difference in reaction to these possible bank failures.
In the past, BTC was heavily correlated to the equities market, but its new reputation as a safe haven amid the banking crisis may be the catalyst that it needs to eventually decorrelate the crypto market entirely.
Only time will tell what will happen if more banking incidents continue to happen, but it is certain that crypto stands to benefit.
Most are terrified to have 1% of assets as #Bitcoin for fear it will CRASH as this chart looks.
Same humans will willingly hold a basket of stocks in an index with a dozen bank stocks.
This chart is First Republic Bank.
If you own S&P 500, you were exposed to this chart. pic.twitter.com/qiVZNNghTf
— Luke Broyles (@luke_broyles) April 26, 2023
As shown in the quarterly report for the first quarter, the run on the bank was more dramatic than previously known. The bank had reported that customers had withdrawn nearly $100 billion in deposits in March.
Only because other major banks stepped in with $30 billion in March, worse was prevented for the time being. But even that was not enough.
At press time, the Bitcoin price was at $29,454. Today marks the most important day of the week for the market with the release of the Personal Consumption Expenditures Price Index (PCE) at 8:30 am EST (2:30 pm CET).
February’s core PCE was +0.3% on a monthly basis, below the forecast of +0.4%. For March, analysts expect an unchanged increase of +0.3%. On a yearly (YoY) basis, an increase of 4.5% is expected, up from 4.6% in the previous month. If the core inflation rate falls, a bullish response in the Bitcoin market is expected.
#Bitcoin is trading for $29,416
down 0.4% in past 24 hours
First Republic Bank (FRC) will likely cause Federal Reserve to inject more liquidity into the market
could send risk assets like BTC higher
— BTC (@btc1crypto) April 29, 2023
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