Bitcoin (BTC) price surged more than 3% over the past 24 hours as fears of another possible imminent bank collapse were fueled as shares in First Republic Bank (FRC) closed more than 50% on April 25 .
According to the head of research at Australian crypto education platform Collective Shift, the price of bitcoin surged immediately after news from Fox News Business reporter Charles Gasperino that bankers working with First Republic Bank expect the institution to be placed under government receivership.
Bankruptcy administration is a tactic that allows creditors to recover funds experiencing a potential default and helps struggling businesses avoid bankruptcy.
Data from crypto analytics firm Santiment suggested that the correlation between Bitcoin and the S&P500 could be eroding as narratives of Bitcoin being a safe haven amid the banking crisis regained momentum.
First Republic began struggling in early March, leading 11 of the largest banking institutions in the United States, including JP Morgan and Bank of America Corp., to deposit $30 billion with the troubled bank.
On March 26, Bloomberg reported that US authorities are considering creating an emergency lending facility to help the bank shore up its “structural challenges” with its balance sheet.
According to anonymous sources, while First Republic was staring at liquidity concerns, U.S. officials said the bank’s deposits were “stabilizing” and that it was not in danger of experiencing “the kind of sudden, severe rush” that prompted regulators to die to close Silicon Valley Bank.
Unfortunately, these assurances have proven to be false.
On Monday, April 23, First Republic reported in its first-quarter earnings conference call that total deposits increased by more than $100 billion.
First Republic Bank results for the first quarter of 2023. Source: Bank of the First Republic
While the bank has yet to clarify exactly what those strategic options are, the earnings report highlighted that the embattled company plans to shrink its balance sheet and slash expenses by cutting executive salaries, cutting office rents and likely 20% to cut 25% of its workforce in Q2.
Related: Bitcoin price can ‘easily’ reach $20,000 in next 4 months – Philip Swift
The banking crisis has weighed heavily on financial institutions in the US over the course of this year. On March 8, Silvergate Bank announced it was closing its doors following a rush for deposits.
Two days later, on March 10th, the California Department of Treasury Protection shut down the Silicon Valley Investment Bank.
Despite the turmoil, US Treasury Secretary Janet Yellen has reiterated that the US banking sector remains robust and stable. “Our banking system remains sound, with strong capital and liquidity positions,” Yellen said in a remark from the Financial Stability Oversight Council (FSOC) April 21 meeting.
Magazine: Unstablecoins: Depegging, bank runs and other risks loom
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
Comments are closed.