At the time of writing, Bitcoin's price surge approaches 5%.
Bitcoin's (BTC) value has surged as First Republic Bank faces a potential collapse, signaling the cryptocurrency's role as a safe place for financial investments.
In the past day, Bitcoin's price leaped over 3% as concerns grew around First Republic Bank (FRC), whose shares plunged by around 50% on April 25th.
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According to Collective Shift's Head of Research, Bitcoin's rally overlapped with Fox News Business Reporter Charles Gasperino announcing that bankers associated with First Republic Bank anticipate the institution entering government receivership.
In a nutshell, a receivership is a tool allowing creditors to recover their funds and help the company itself to avoid bankruptcy.
Crypto analytics firm Santiment's data indicates that the correlation between Bitcoin and the S&P 500 might be fading as the idea of Bitcoin being a "safe place" amid banking crises resurfaces.
First Republic Bank initially encountered difficulties in early March, prompting 11 of the largest US banking institutions, such as J.P. Morgan and Bank of America Corp., to deposit $30 billion with the troubled bank.
On March 26th, Bloomberg disclosed that US authorities were considering establishing an emergency lending facility to help the bank address its balance sheet's "structural challenges."
Despite First Republic's liquidity issues, anonymous sources claimed that US officials saw the bank's deposits as "stabilizing" and not prone to the abrupt, severe run that caused regulators to shut down Silicon Valley Bank. However, it appears that these claims were false.
First Republic revealed in its April 23rd first-quarter earnings call that total deposits had nosedived by over $100 billion. The bank announced plans to "pursue strategic options" to fortify its financial position as soon as possible. It appears that the bank plans to reduce expenses through measures such as cutting executive salaries, downsizing office leases, and laying off an estimated 20% to 25% of its workforce in Q2.
Bitcoin's price increase amid First Republic Bank's downfall underlines the cryptocurrency's potential as a financial sanctuary during banking instability.
At the time of writing, Bitcoin (BTC) retails for 28,501.50, recording a 4.38% price increase in the last 24 hours.
