[{"category":{"name":"Trending News","exported_url":"trending-news"},"id":"1ae5d8f9-c5ff-4ef9-96c4-419120207261","updated_at":"2023-04-27T03:22:25.354371+00:00","account":{"firstName":"Akash","lastName":"Kashyap"},"description":"As First Republic Bank's stock plummets, Bitcoin's worth escalates, sparking investor interest and possible repercussions in the market.","sapo":"Bitcoin's value surges amid First Republic Bank's stock decline, prompting investor curiosity and potential market implications.","title":"Bitcoin Value Surges Following The Decline in First Republic Bank's Stock Price","content":"

Bitcoin's value surged over 3% in the past day, amid concerns of another potential bank collapse, following a more than 50% drop in First Republic Bank (FRC) shares on April 25.

The head of research at Collective Shift, an Australian cryptocurrency education platform, noted that Bitcoin's price surged right after Fox News Business reporter Charles Gasperino revealed insiders at First Republic Bank anticipate the bank entering government receivership.

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Receivership is a strategy creditors use to recoup funds at risk of default, helping struggling companies evade bankruptcy.

Crypto analytics firm Santiment's data indicates a potential weakening correlation between Bitcoin and the S&P 500, as the notion of Bitcoin being a secure refuge during banking crises starts to regain traction.

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First Republic encountered problems starting in early March, prompting 11 of the biggest U.S. banks, such as J.P. Morgan and Bank of America Corp., to inject $30 billion into the distressed institution.

Bloomberg reported on March 26 that U.S. officials were considering establishing an emergency loan mechanism to help the bank address the "structural issues" in its balance sheet.

Anonymous sources at the time stated that, despite the First Republic facing liquidity issues, U.S. officials considered the bank's deposits "stabilizing" and claimed it wasn't at risk of undergoing "the type of abrupt, intense run" that caused regulators to shut down Silicon Valley Bank.

Regrettably, these assurances have turned out to need to be more accurate.

On April 23, during its first-quarter earnings call, First Republic disclosed that total deposits had declined by over $100 billion, and the bank would be "exploring strategic alternatives" to bolster its financial position promptly.

The report presents First Republic Bank's financial outcomes for Q1 2023.

Figure 01. Q1 2023 financial results for First Republic Bank. Source: First Republic Bank

Although the specific strategic alternatives remain unspecified, the earnings report emphasized the struggling bank's intentions to reduce its balance sheet size and trim costs by cutting executive pay, scaling back office leases, and anticipating the dismissal of 20% to 25% of its workforce in Q2.

Throughout the year, the banking crisis has significantly impacted U.S. financial institutions. On March 8, Silvergate Bank declared its closure after facing a deposit run.

A mere two days afterwards, the California Department of Financial Protection closed down Silicon Valley Investment Bank.

Amid the chaos, U.S. Treasury Secretary Janet Yellen has reaffirmed the strength and stability of the American banking sector. "Our banking system remains sound, with strong capital and liquidity positions," Yellen stated during the Financial Stability Oversight Council meeting on April 21.

","tags":[{"tag":{"tag":"Bitcoin","id_tag":"bitcoin"}},{"tag":{"tag":"Banks","id_tag":"banks"}},{"tag":{"tag":"Bank of America","id_tag":"bank-of-america"}}],"image":{"fileName":"Bitcoin Value Surges.png"}}]

Bitcoin Value Surges Following The Decline in First Republic Bank's Stock Price

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