Bitcoin BTC Price Drops Below $28K As JPMorgan Takes Over Embattled First Republic Bank
Bitcoin (BTC) started the US trading week below $28,000 – continuing a downward spiral that began on Sunday as federal regulators prepared to seize control of First Republic Bank.
The largest cryptocurrency by market capitalization recently traded at around $27,800, down more than 5% in the past 24 hours, according to CoinDesk data. BTC had hovered around $28,500 when US markets opened and it was announced that banking giant JPMorgan had won the auction to buy First Republic assets.
Edward Moya, senior market analyst for currency Oanda, suggested in a note that the quick response to First Republic’s implosion showed that the banking sector was prepared to deal with this type of crisis. Wall Street may have been reassured that greater banking risk has been “taken off the table,” Moya wrote.
“It looks like the US banking system has a playbook for dealing with the next banking crisis when it comes, which dampens the case for crypto,” he added.
San Francisco-based First Republic is the fourth bank to fail in the past two months, following banks Silvergate, Silicon Valley and Signature.
Ether (ETH), the second-largest cryptocurrency by market cap, followed a similar pattern to bitcoin, falling more than 4% to trade hands at around $1,813 on Monday afternoon.
Stocks closed lower on Monday, with the S&P 500, Wall Street’s benchmark stock index, down 0.04%. Both the Dow Jones Industrial Average (DJIA) and tech-heavy Nasdaq Composite recently fell 0.1%.
Investors will look to the Federal Open Market Committee’s (FOMC) monetary policy meeting, which begins on Tuesday, to decide whether and by how much to raise interest rates. CME’s FedWatch tool currently puts the probability of a 25 basis point (bps) increase at more than 94%, which would increase the target range to between 5% and 5.25%.
Some analysts expected that the decision could cause price fluctuations in the crypto market.
“After a breakout (BTC above ~$25,000), it’s important to factor in pullbacks to gauge remaining buying strength,” bitcoin mining equipment and hosting provider Blockware Solutions Analysts wrote in a newsletter Friday. “In this case, BTC flashed some pretty bullish signals as buyers quickly entered the 50-day [simple moving average].”
Blockware Solutions analysts said BTC has strong resistance between $30,000 and $31,000, although they noted that “it is not unreasonable to assume that the FOMC policy decision could make or break current BTC strength.”
After soaring in March, bitcoin rose a more modest 2.5% in April amid cryptoregulatory, banking and other macroeconomic uncertainties, according to the CoinDesk Market Index (CMI), which measures the crypto market’s overall performance. Ether climbed 4.4%, with much of the gain coming as the successful Ethereum Shanghai upgrade did not lead to a mass selloff of ETH, as some market observers had expected.
Blockchain-based distributed rendering service Render Network’s utility token RNDR was the top asset in CMI, up 77%, followed by decentralized finance (DeFi) platform Injective Protocol’s INJ token, which jumped 69%.
Chains XCN token in CMI’s currency sector was among the biggest CMI laggards, plunging over 33% in April. It fell over 53% in March.
But regulation remains a major stumbling block for the industry. In the US, exchange giant Coinbase (COIN) demanded that a federal court compel the Securities and Exchange Commission (SEC) to clarify whether existing securities laws apply to digital assets, and the EU finalized legislation aimed at clarifying the region’s regulatory approach to the sector. The next steps for the industry worldwide may affect prices in the months ahead, according to a number of analysts.
