Bitcoin Price Rises Amidst First Republic Bank Crisis
Bitcoin experienced price rises amidst the first Republic Bank crisis within the last 24 hours due to fears of another banking crisis in the United States. Australian crypto education platform Collective Shift suggested that the price of Bitcoin railed as bankers working with First Republic Bank.
Relationship Between Bitcoin and S&P
Receivership allows creditors to recover funds experiencing potential default and assist troubled firms in avoiding bankruptcy. Therefore, data from crypto analytics firms showed that the connection between Bitcoin and S&P 500 may be dwindling. Bitcoin may be a haven in times of banking crisis started to gain steam again.
First Republic Bank Reports Drop in Deposits
First Republic Bank began to experience issues in early March. It is leading 11 of the most extensive banking institutions in the U.S., including J.P. Morgan and Bank of America, to deposit $30 billion at the troubled bank.
Moreover, on March 26, Bloomberg announced that U.S. authorities were considering generating an emergency lending facility. It was to help the bank fortify the structural challenges with its balance sheet.
A Toll on Finance Institutions
On April 23, First Republic Bank reported in its first quarter earning call that total deposits had plummeted by over $100 billion. Therefore, the bank said it would pursue strategic options to strengthen its financial system.
While the bank has yet to clarify what these options are? The earning reports highlight that the firm plans to downsize office leases and lay off an expected 20% to 25% of its workers in Q2.
Reassurance on Stability of Banking Sectors
The banking crisis has heavily affected financial institutions in the U.S. Silvergate Bank. Therefore, it was announced on March 8 that it would be closing its doors after having experienced a run-on deposit. The California Department of Financial Protection closed Silicon Valley Investment Bank two days later.
U.S. Treasury Secretary Janet Yellen repeated that the American banking sector remains strong and stable despite the turmoil. So, she said that ‘’our banking system remains sound, with substantial capital and liquidity positions”.
Conclusion
We can conclude that Bitcoin price rises amidst the first Republic Bank crisis. Therefore, it is considered by some to be a haven in times of banking crisis. The situation in the U.S. banking sector has already guided to the closure of some institutions.