The second biggest bank failure in US history has just taken place, and First Republic bank, which was the 14th biggest bank in the US, has gone into receivership and has been bought by JP Morgan Bank. Already the biggest bank in the US, JP Morgan will now have an extra 84 banking offices across 8 States. Jamie Dimon, CEO of JP Morgan Chase, said that his bank’s purchase of First Republic Bank would “modestly benefit” the firm.
However, as more banks are also facing similar struggles to First Republic Bank, if they are not considered to be “systemically important” they will also be allowed to be gobbled up by the bigger banking institutions, leading to further monopoly of the industry. As the news of the latest bank to fail hits the headlines, the Federal Reserve says that it is still doggedly on course to raise interest rates another 25 basis points at its FOMC meeting which convenes this Wednesday. According to the CME’s Fedwatch tool, the likelihood of this 0.25% raise is at 83%.
Arthur Hayes, the former CEO of BitMEX tweeted that in his view the Federal Reserve would be obliged to turn on the printers again in order to backstop a larger proportion of the US banks. He also continues to maintain that BTC will go to $1 million.
BTC is currently facing some of its own obstacles. The price is currently at $28,560 after a weekly and monthly close that saw the price draw back to $29,230. The price went down as far as the uptrend support at $28,250 before recovering to $28,500 at the time of going to press. If Bitcoin loses this trend, it can potentially pull back to the extremely strong support at around $25,000. The 200-week moving average is the last solid line of defence, currently at just under $22,000.
If the Federal Reserve breaks the economy and forces the US into recession with its insistence on raising interest rates, the public could lose further trust in the banking system – and this is where Bitcoin can truly start motoring into its bull run. The main conflict here lies in the balance between traditional banks’ monopoly and the potential of cryptocurrencies to revolutionize the financial industry. While JP Morgan’s acquisition of First Republic Bank highlights the consolidation of power within the banking sector, Bitcoin and other cryptocurrencies represent a decentralized alternative that could thrive as public trust in banks wanes.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Source: Cryptodaily
https://www.cryptodaily.co.uk/2023/05/2nd-biggest-us-bank-failure-just-happened-bitcoin-on-brink
