Bitcoin rises as crypto market rallies on new banking sector fears

• Bitcoin rose as much as 9% on Wednesday, approaching the all-important $30,000 level.
• The rally comes as First Republic Bank raises new fears of weakness in the banking sector.
• Investors also add risk when anticipating a Fed pivot, a crypto executive told Insider.

Bitcoin jumped as much as 9% on Wednesday, approaching the key $30,000 price level, as concerns in the banking sector resurfaced.

First Republic Bank shares fell nearly 50% on Tuesday and lost another 20% on Wednesday, hitting a record low, after reporting higher-than-expected customer deposit withdrawals.

Concerns were heightened after Bloomberg reported that the regional bank is in talks for a rescue plan that could involve $100 billion in asset sales.

Bitcoin rallied through turmoil in March when Silicon Valley Bank failed, and industry observers said a similar situation is unfolding for the world’s biggest crypto amid the latest bout of uncertainty.

“BTC is seeing a rally because another public bank, First Republic Bank, crashing has re-stimulated the ‘not your keys, not your money’ narrative, leading more and more people to realize the beauty and reliability of bitcoin [and] crypto’s decentralized peer-to-peer cash system,” Youwei Yang, chief economist at crypto mining company BTCM, told Insider.

Bitcoin’s rally on Wednesday ended a five-day losing streak. The token has largely broken in April and 2023, hitting 10-month highs earlier this month at nearly $31,000.

Ethereum, meanwhile, is up 7% in the past day, according to Messari, as altcoins like solana and polygon also jumped 8% and 9%.

Michael Dunn, head of product at derivatives exchange operator Bitnomial, told Insider that traders may be “signaling risk-on sentiment as they anticipate a potential softening of Fed policy and potential liquidity injections around First Republic Bank.”

Another crypto executive echoed similar sentiments, adding that the spate of bank failures like Silicon Valley Bank last month had investors questioning the stability of traditional financial services.

Unrest in the sector has highlighted that “perhaps well-founded blockchain-based systems and cryptocurrencies with solid support and use can be as good or even better, safer, cheaper and faster to use than the traditional banking systems,” Mikkel Morch, chairman of the investment fund ARK36, told Insider.