First Republic Bank Collapse Worsens US Banking Crisis, Bitcoin Rallies: What You Need to Know

The US banking system is currently experiencing a crisis, with another bank on the verge of collapse. First Republic Bank, one of the mid-sized lenders in the country, has recently faced significant losses and deposit outflows, causing investors to lose confidence in the bank. This has resulted in the bank’s stock plummeting by 50% on April 25, making it the worst-performing bank on the S&P 500.

First Republic Bank Faces Major Crisis

The situation with First Republic Bank has become a major cause for concern, with reports of deposit outflows causing anxiety in the market. The bank has lost around $100 billion in deposits and has already begun exploring strategic options. However, investors and analysts are skeptical of the bank’s ability to bounce back.

The bank has borrowed $92 billion in the first quarter, mostly from the Federal Reserve and government-backed lending groups, to replace lost deposits with loans. In March, it received temporary relief of $30 billion from major banks like JP Morgan Chase. Despite these efforts, the bank’s executives failed to establish confidence during a conference call, causing further panic among investors.

Contagion Spreads to Other Banks

The contagion appears to have spread to other American banks, with concerns growing over another bank-induced financial crisis. Shares of PacWest Bancorp have fallen by around 60% since early March, and Northern Trust has also seen a slide in its stocks. This has only added to the growing concern among investors and analysts.

Yellen and Powell Urge Investors Not to Panic

In response to the situation, Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell have urged investors not to panic. They have assured investors that they will support the banking system and ensure that it weathers the storm.

Bitcoin Rallies Amid Banking Crisis

Despite the negative news surrounding the US banking crisis, Bitcoin has reacted positively to the situation, gaining around 4% over the past 12 hours and currently trading at $28,368 at the time of writing. This is not surprising as Bitcoin was spawned from the last banking crisis in 2008. The decentralized nature of Bitcoin provides an alternative to the traditional banking system and has become an attractive investment option for many.

However, the recent rally may be short-lived, as Bitcoin remains down by 6.5% over the past week as the crypto market corrects. Additionally, the $28,000 price zone has now flipped from support to resistance, indicating that Bitcoin may face further challenges in the near future.

Conclusion

The US banking crisis continues to worsen, with another bank on the verge of collapse. Investors and analysts are concerned about the possibility of another bank-induced financial crisis, but Treasury Secretary Yellen and Federal Reserve Chairman Powell have reassured them that the banking system will be supported. Bitcoin has reacted positively to the situation, gaining around 4%, but it remains to be seen whether the rally will be short-lived. Investors and analysts will be keeping a close eye on the situation, hoping that the US banking system will weather the storm and avoid a repeat of the 2008 financial crisis.

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