As per the Wall Street Journal, the US government is set to take First Republic Bank under the FDIC (Federal Deposit Insurance Corporation) receivership this weekend. This development will put additional pressure on the US central bank Federal Reserve’s balance sheet, pushing the Bitcoin price to rally towards $35,000.
First Republic Bank is not the only bank facing an imminent collapse; four to five banks are also at risk of going bankrupt, with billions of dollars worth of bank deposits withdrawn. In light of this, the Fed will have to print more money to rescue these cash-strapped banks on the brink of collapse.
FDIC Receivership of First Republic Bank This Weekend
According to the Wall Street Journal report on April 29, the FDIC receivership of First Republic Bank is set to take place this weekend. Several banks, including JPMorgan Chase & Co and PNC Financial Services, are already preparing to purchase First Republic Bank after its closure by the government.
First Republic’s shares have been in freefall since Monday, plummeting over 75% to $3.51 at market close on Friday. During after-hours trading, FRC shares fell by 33% to $2.33.
Some experts in Wall Street have revealed that First Republic Bank’s collapse is just the beginning, with government agencies looking at four to five more banks that could fail in the coming months. In March, big banks like JPMorgan and PNC attempted to prevent problems at First Republic Bank by providing a $30 billion deposit, but the bank has been unable to stop continued withdrawals of deposits.
The Fed has already printed nearly $400 billion to save banks from collapsing. However, despite the ongoing banking crisis, the Fed increased interest rates by another 25 bps to 4.75%-5% in March. Wall Street analysts anticipate a pause by the central bank when it announces its next rate hike decision on May 3.
Second Wave of Banking Crisis Will Increase Pressure on the Fed
The second wave of the banking crisis, which is currently underway, will force the Fed to print more money to bail out banks, causing Bitcoin prices to rally towards $35,000.
Bitcoin’s Price Movement in the Last 24 Hours
In the last 24 hours, the BTC price has been trading sideways, with the price currently hovering near $29,500. The 24-hour low and high are $28,929 and $29,526, respectively. Additionally, trading volume has decreased by 31% in the last 24 hours, with traders awaiting the Fed’s monetary policy decision.
Furthermore, the rise of cryptocurrency as an alternative asset class has also played a role in the increasing popularity of Bitcoin. With the global cryptocurrency market reaching a market capitalization of over $2 trillion in 2021, there is no denying that Bitcoin and other cryptocurrencies are here to stay.
As for the current situation with the banking crisis, it is important to note that while the collapse of First Republic Bank and potential collapse of other banks may lead to short-term gains in Bitcoin prices, it is not a sustainable solution for the long-term stability of the economy.
In fact, the collapse of banks and the need for the Fed to print more money can lead to inflation and a devaluation of the dollar, which ultimately hurts the average consumer. It is important for the government and financial institutions to work towards creating a more stable and resilient banking system.
One potential solution to this problem is the implementation of decentralized finance (DeFi) systems. DeFi is a system of financial applications that are built on top of blockchain technology, which enables users to conduct financial transactions without the need for intermediaries like banks.
By using DeFi systems, users can access financial services such as lending, borrowing, and trading without the need for traditional financial institutions. This not only reduces the risk of bank collapses but also provides greater financial inclusion for individuals who may not have access to traditional banking systems.
Furthermore, DeFi systems are transparent and open-source, which means that anyone can access the underlying code and audit the system for potential vulnerabilities. This helps to prevent fraudulent activities and ensures the security of users’ funds.
The rise of DeFi has already gained significant traction, with the total value locked (TVL) in DeFi systems reaching a high of over $90 billion in May 2021. As more users become familiar with the benefits of DeFi, it is likely that the TVL will continue to grow and eventually rival that of traditional financial institutions.
One potential solution to this problem is the implementation of DeFi systems, which not only reduces the risk of bank collapses but also provides greater financial inclusion and transparency. As the DeFi ecosystem continues to grow, it may eventually rival traditional financial institutions and provide a more sustainable and equitable financial system for all.
The banking crisis in the US is likely to escalate further in the coming months, with four to five banks facing imminent collapse. The Fed will have to print more money to rescue these banks, which will inevitably increase pressure on its balance sheet.
This will cause the Bitcoin price to rally towards $35,000, presenting an excellent opportunity for investors to make a profit. However, investors must be cautious and keep track of the latest developments in the banking sector to make informed investment decisions. You can join our whatsapp community for more information