• First Republic Bank has failed and been taken over by JP Morgan, leading to a further monopoly of the banking industry.
• The Federal Reserve is still committed to raising interest rates at its upcoming FOMC meeting.
• Bitcoin is currently facing some obstacles, with the price being pulled back as low as $28,250 before recovering.
First Republic Bank Failure
First Republic Bank has failed and been taken over by JP Morgan. This acquisition will lead to a further monopolisation of the banking industry in the US, with JP Morgan now having an extra 84 banking offices across 8 States. Jamie Dimon, CEO of JP Morgan Chase said that his bank’s purchase would “modestly benefit” the firm.
Federal Reserve Strategy
The Federal Reserve says that it is still on course to raise interest rates another 25 basis points at its FOMC meeting which convenes this Wednesday. It is likely that other banks facing similar struggles may be allowed to be bought up by bigger institutions if they are not considered systemically important. Arthur Hayes, former CEO of BitMEX suggests that the Fed will be obliged to turn on the printers again in order for US banks to stay afloat.
Bitcoin (BTC) is currently facing some obstacles of its own; after a weekly and monthly close that saw prices draw back from $29,230 down to $28,250 before recovering back up to $28,500 at time of writing. If BTC were to lose this trend it could pull back all the way down to around $25,000 or even the 200 week moving average at just under $22,000 – both representing extremely strong levels of support for Bitcoin’s value.
Potential Impact On Bitcoin
If the Federal Reserve continues with their intention of raising interest rates despite escalating economic uncertainty then this could damage public trust in traditional banks – providing an opportunity for Bitcoin’s value proposition as a digital currency outside of government control and centralised financial systems more generally.
The news surrounding First Republic Bank going into receivership is yet another example of how US banking institutions are increasingly consolidating their power within the sector – potentially creating an environment where BTC can rise in value due its decentralised nature and potential as an alternative store-of-value asset outside government control. In order for this shift towards digital currencies such as BTC become reality however it needs strong levels of support in order for prices not fall too far or too fast when market conditions get tough – something which remains uncertain at present but could become clearer depending on what happens with US interest rate policy over coming weeks and months ahead