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Bitcoin Rallies Amid First Republic Bank's Price Decline | FameEX

2023-04-26 17:14:55

Bitcoin has seen a surge of more than 3% over the last 24 hours following concerns of a possible bank failure after the shares of First Republic Bank (FRC) dropped by over 50% on April 25. It has been reported that bankers working with First Republic Bank expect the institution to go into government receivership, which is a tactic that allows creditors to recover funds experiencing potential default while helping troubled firms avoid bankruptcy. The correlation between Bitcoin and the S&P 500 is suggested to be dwindling as the narrative that Bitcoin is a safe haven amid the banking crisis has once again gained momentum. Despite the challenges, U.S. officials declared that the bank's deposits were "stabilizing," and it was not at risk of experiencing a "sudden, severe run" that led regulators to close down Silicon Valley Bank.

In its first quarter earnings call on April 23, First Republic Bank reported that total deposits had plummeted by more than $100 billion and it would be "pursuing strategic options" to strengthen its financial standing as quickly as possible. While the bank has not clarified what these strategic options are, it plans to downsize its balance sheet, cut expenses by slashing executive salaries, slimming down on office leases, and laying off an expected 20% to 25% of its employees in Q2. The banking crisis has taken a heavy toll on financial institutions in the U.S. over the course of this year. Two banks, Silvergate Bank and Silicon Valley Investment Bank, announced that they would be closing their doors after experiencing a run on deposits and being shut down by the California Department of Financial Protection, respectively. Despite the turbulence, U.S. Treasury Secretary Janet Yellen reiterated that the American banking sector remains robust and stable.

With the continued volatility in the banking sector, Bitcoin and other cryptocurrencies may emerge as alternative investment options for investors seeking a safe haven in turbulent times. However, it is important to keep in mind that cryptocurrencies are also subject to volatility and may not be suitable for all investors.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.

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