Bitcoin Rallies as Bank Failure Concerns Grow Following First Republic Bank's Deposit Loss
Bitcoin (BTC) experienced a price surge of more than 3% in the last 24 hours, breaking through the US$28,000 mark. This spike in Bitcoin's value can be attributed to multiple factors, including favourable Q1 earnings reports from tech giants Alphabet and Microsoft and concerns over banking stability.
The banking stability concerns emerged after First Republic Bank (FRC) shares closed down more than 50% on April 25, following the bank's announcement that it had lost more than $100 billion in deposits during the first quarter. This loss of deposits followed issues that First Republic began experiencing in early March, which led to 11 of the largest banking institutions in the United States depositing $30 billion at the troubled bank.
Despite concerns over the bank's liquidity, 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. However, First Republic's Q1 earnings report proved these reassurances incorrect, leading to speculation that the bank may go into government receivership.
Bitcoin's price surge following the news about First Republic Bank suggests that investors see the cryptocurrency as a safe haven amid the banking crisis. This is a narrative that has been gathering steam recently, and data from crypto analytics firm Santiment suggests that the correlation between Bitcoin and the S&P500 may be dwindling.
Overall, the current situation highlights the growing interest in Bitcoin and other cryptocurrencies as an alternative to traditional banking systems. While it remains to be seen whether Bitcoin will continue to function as a safe haven in times of crisis, the current trend suggests that it may be increasingly seen as a viable option for investors looking to diversify their portfolios.