Bitcoin volatility amid banking chaos looks dangerous

The turmoil in the banking sector shows no sign of abating as another major bank faces mounting challenges. With deposit levels falling rapidly and regulators expected to step in, the situation has only intensified in recent days.

Bitcoin’s price appears to be benefiting from First Republic Bank’s troubles, but the pop may be short-lived.

According to on-chain data, the flagship cryptocurrency passed $29,000, but quickly retreated, then bounced back. The rally followed the latest news about First Republic Bank’s potential problems.

Safe haven asset or not?

Yesterday news broke of the massive withdrawal from First Republic Bank. The bank’s customers are said to have withdrawn 100 billion dollars after the recent banking crisis in the United States.

Alternatively, the bank’s shares have fallen by 97 per cent since the beginning of the year.

The Dow Jones fell more than 200 points as investors’ attention was divided between excitement over the earnings results of major technology companies and concerns about First Republic Bank.

The bank recently announced a 41% drop in deposits for the first quarter. At the end of the fourth quarter of 2022, deposits reportedly totaled $176 billion. As of March, however, deposits fell to $104 billion, indicating a significant loss of confidence from the bank’s customers.

First Republic Bank said it is considering “strategic options.” However, no viable solution was in the works, according to a source familiar with the matter. The source also noted that First Republic Bank is contacting US authorities.

Not The Last Dead Bank

The latest problems at First Republic Bank have sent shockwaves through the financial world, causing widespread concern among investors and analysts. The bank’s fate has become the subject of intense speculation, particularly in the wake of the crashes of three other US banks in March.

Many feared it would be the next bank to fail, but its survival was ensured thanks to the emergency intervention of the US government and the support of 11 major banks.

On March 16, those banks put a staggering $30 billion into First Republic to prevent a bank run. Despite this, there are still concerns that regulators could seize the bank in the future, as reported by FOX.

In recent weeks, rumors have circulated about First Republic’s attempt to sell part of the bank to raise capital and strengthen its financial position.

However, potential partners have been hesitant to commit due to the high level of risk involved in taking on a troubled bank. This has left the First Republic in a precarious position, with few options available.

Greater economic weakness

With many businesses struggling to stay afloat and the economy in turmoil, banks face increasing pressure to maintain financial stability and avoid becoming the next broken link.

As regulators and industry experts grapple with these issues, it remains to be seen what the future holds for banks like First Republic and the broader financial system.

Despite assurances from the authorities that the banking system remains strong, analysts remain skeptical and worry about the potential long-term implications. As the crisis deepens, it remains to be seen how much more upheaval the financial services industry will face in the coming weeks and months.

Briefly, after the news broke, Bitcoin surged above $29,000. At press time, the largest cryptocurrency is trading at $28,800 after falling below $27,500. The crypto market is highly volatile, with other top coins experiencing the plunge.

The latest banking crisis events led by SVB have created widespread panic and uncertainty among investors about the stability of the traditional financial system. This has led many to seek alternative forms of investment, such as cryptocurrencies such as Bitcoin.

Bitcoins so far this year show a value increase of 70%. Bitcoin’s recent rise in value is a testament to its growing popularity as an alternative to the traditional banking system.

Many are bullish on the future of cryptocurrencies, predicting that Bitcoin could break through $100,000.

On the other hand, the regulatory landscape is not favorable. Cryptocurrency’s reputation for being associated with illegal activities, such as money laundering and terrorist financing, makes it a Wild West under intense scrutiny.