Bitcoin has gained 8.81% of its value in 24 hours to trade at 29,783. The recent financial crisis caused the price of Bitcoin to decouple from the stock markets and surge toward the end of Q1. Currently, speculation about the likelihood of a similar happening is on the rise, and Bitcoin appreciated due to the First Republic Bank’s fall.
- Shares of the First Republic Bank fell dramatically following a disappointing quarterly report.
- According to reports, the American government plans to seize the bank.
- BTC/USD has risen as a drop in bank deposits fuels new financial crisis worries in the United States.
First Republic Bank, located in San Francisco, stated on Monday that it lost deposits totaling over $70 billion in the first quarter, a significant 41% loss. The bank revealed that clients withdrew $102 billion in deposits in the first quarter, far more than the $176 billion it had at the end of the year. Customers removed their funds after Silicon Valley Bank collapsed.
Additionally, after releasing a poor quarterly report which revealed higher-than-expected withdrawals, shares of First Republic Bank fell dramatically. Tuesday saw a nearly 50% decline in the price of the bank’s shares. It creates worries about the lender’s ability to remain solvent.
As a result, rumors circulated that it would soon become the third major bank to fail this year, as fear gripped the United States. Furthermore, with the Fed interest rate decision just a few days away, confidence in local banks declined. Hence, the investors were seeking refuge in safe assets like cryptocurrencies, so, Bitcoin gained.
The Financial Times writes that representatives from the Biden administration, the Fed, and the Treasury Department met with the bank’s senior executives in recent days. However, the White House is still unsure of its ability to find a route out of insolvency.
Furthermore, First Republic Bank employees claim that the government would take control of the failing bank through “receivership” — a process similar to bankruptcy in the private sector — after the bank has tried all options, including selling assets and finding a buyer, both of which seem difficult at the moment.
Bitcoin Jumped on Banking Crisis Fear
Concerns about the First Republic and reports of its possible collapse are influencing Bitcoin. It is because investors are using Bitcoin as a hedge against the financial system’s volatility as long as traditional banks continue to experience financial catastrophes. The trend shows how Bitcoin is becoming more regarded as a safe haven. Therefore, as investor fears about the US banking industry started to rise once more, the value of cryptocurrencies increased.