Bitcoin at $28,600, First Republic sold to JP Morgan
After the Bitcoin price fell below $28,500 late Sunday night (EST), the hoped-for rebuttal in response to the seizure of First Republic Bank (FRC) has not materialized. While recent bank failures have sparked an upward momentum for Bitcoin, the price is currently hovering around $28,600.
First Republic sold to JP Morgan
Over the weekend, efforts were made to prevent a collapse of First Republic Bank. 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 Department of Financial Protection and Innovation (DFPI) announced that the American deposit insurance company Federal Deposit Insurance Corporation (FDIC) has accepted JPMorgan’s offer to take over the financially distressed regional bank. First Republic’s branches will reopen as JPMorgan Chase.
Remarkably, even US law was set aside for this, as 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 before the deal. This makes the biggest bank in the US even bigger.
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. Truist: 3.4%
7. PNC Bank: 3.3%
8. TD Bank: 2.9%
9. Charles Schwab: 2.7%
10. Capital One: 2.6%The top 15 banks control 75% of…
— The Kobeissi Letter (@KobeissiLetter) 30 April 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 take over all of First Republic’s remaining $103.9 billion in deposits 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 the insurance fund would be hit by $13 billion in the deal.
Bitcoin price remains below $29,000
In the Bitcoin and crypto community, the collapse of First Republic Bank caused not only schadenfreude, but also hope for an increase in the price. As with the first wave of bank failures in the United States, it was hoped that the bailout would increase liquidity in the financial system.
BitMEX founder Arthur Hayes wrote up front that the problem with FRC is that its balance sheet contains few government bonds and many other assets such as commercial real estate loans which were not suitable collateral for the Bank Term Funding programme.
Therefore, unless some muppet bank decides to bail out the FRC, expect the Bank Term Funding Program to be expanded over the weekend to allow other types of loans to be eligible to be exchanged for newly printed dollaz.
And then $BTC will take another leg up as another few trillion $ are added to the tab. Money Printer go Brrr!!!
Unfortunately for Bitcoin investors, this did not happen as JP Morgan received special permission to take over FRC. At press time, the Bitcoin price was at $28,574, stabilizing after Sunday’s drop.
Featured image from iStock, chart from TradingView.com
