After bitcoin price slipped below $28,500 late Sunday night (EST), the hoped-for bounce in response to the First Republic Bank (FRC) seizure failed to materialize. While recent bank failures have sparked bullish momentum for Bitcoin, the price is currently hovering around $28,600.
First Republic sold to JP Morgan
Attempts were made to prevent a collapse of the First Republic Bank over the weekend. A few hours ago, the US Deposit Insurance Corporation found a solution: JP Morgan Chase will buy FRC. The banking giant will take over the assets of First Republic Bank.
California’s Department of Financial Protection and Innovation (DFPI) announced that US deposit insurer Federal Deposit Insurance Corporation (FDIC) has accepted JPMorgan’s bid to acquire the financially troubled regional bank. First Republic stores reopen as JPMorgan Chase.
Remarkably, even US law was provided for this, since US banks are not allowed to make acquisitions that would give them more than 10% of US deposits. As The Kobeissi Letter wrote, JP Morgan already owned 16.1% of all US bank deposits prior to the deal. This will make the largest bank in the USA even bigger.
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Percentage of deposits controlled by US banks:
1. JP Morgan: 16.1%
2. Bank of America: 14.8%
3. Wells Fargo: 10.9%
4. Citibank: 5.8%
5. US Bank: 3.4%
6. Trustworthy: 3.4%
7. PNC Bank: 3.3%
8. TD Bank: 2.9%
9. Karl Schwab: 2.7%
10. Capital One: 2.6%
The top 15 banks control 75% of…
— The Kobeissi Letter (@KobeissiLetter) April 30, 2023
According to insiders, half a dozen banks participated in the bidding process for First Republic Bank, including Citizens Financial and PNC Financial Services. JPMorgan will assume all of First Republic’s remaining deposits of $103.9 billion and buy most of its $229.1 billion in assets, the FDIC announced.
Under the agreement, the FDIC will share losses with the bank. The agency estimated that its insurance fund would take $13 billion in damage from the deal.
Bitcoin price stays below $29,000
In the Bitcoin and crypto community, the collapse of the First Republic Bank not only caused glee, but also hope for a price increase. As with the first wave of bank failures in the US, there was hope that the bailout would increase liquidity in the financial system.
BitMEX founder Arthur Hayes previously wrote that the problem with FRC is that its balance sheet contains few government bonds and many other assets such as commercial real estate loans that were not suitable collateral for the bank term funding program.
So unless some Muppet bank decides to bail out FRC, the Bank Term Funding Program will expand over the weekend to allow other types of loans to be exchanged for freshly printed dollars.
And then $BTC will take another step up as another few trillion $ will be added to the tab. Money printer go Brrr!!!
Unfortunately for bitcoin investors, this did not happen as JP Morgan received special permission to acquire FRC. At press time, bitcoin price is trading at $28,574, stabilizing after Sunday’s decline.
BTC price 4 hour chart | Source: BTCUSD on TradingView.com
Featured image from iStock, chart from TradingView.com
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