Bitcoin price jumps in wake of First Republic Bank crash
The price of Bitcoin (BTC) rose more than 3% in the past 24 hours as fears of another possible imminent bank failure were sparked as First Republic Bank (FRC) shares closed down more than 50% on April 25.
According to the head of research at Australian crypto education platform Collective Shift, the price of Bitcoin rose immediately after Fox News Business Reporter Charles Gasperino broke the news that bankers working with First Republic Bank expect the institution to go into receivership.
Receivership is a tactic that allows creditors to recover funds experiencing a potential default and helps troubled firms avoid bankruptcy.
Data from crypto analytics firm Santiment suggested that the correlation between Bitcoin and the S&P500 may be easing as the narrative that Bitcoin is a safe haven amid the banking crisis began to gather again.
First Republic began experiencing problems in early March, prompting 11 of the largest U.S. banking institutions, including JP Morgan and Bank of America Corp., to put $30 billion into the troubled bank.
On March 26, Bloomberg reported that the US government is looking at creating an emergency loan facility to help the bank shore up its “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 that the bank’s deposits were “stabilizing” and that it was not in danger of experiencing “the kind of sudden, severe run” that led to regulators to shut down Silicon Valley Bank.
Unfortunately, these assurances have proven to be false.
On Monday, April 23, First Republic reported in its first-quarter earnings call that total deposits had fallen more than $100 billion and that it would “pursue strategic options” to strengthen its financial position as quickly as possible.
While the bank has yet to clarify exactly what those strategic options are, the earnings report highlighted that the beleaguered firm plans to reduce its balance sheet and cut expenses by cutting executive pay, cutting back on office leases and laying off an expected 20% to 25% of its workforce in 2nd quarter.
Related: Bitcoin Price Could ‘Easily’ Reach $20,000 In Next 4 Months – Philip Swift
The banking crisis has taken a toll on financial institutions in the US during this year. On March 8, Silvergate Bank announced it would be closing its doors after experiencing a run on deposits.
Two days later, on March 10, Silicon Valley Investment Bank was shut down by the California Department of Financial Protection.
Despite the turmoil, US Treasury Secretary Janet Yellen has reiterated that the US banking sector remains robust and stable. “Our banking system remains healthy, with strong capital and liquidity positions,” Yellen stated in remarks at the Financial Stability Oversight Council (FSOC) Council Meeting on April 21.
