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Ethereum price came under pressure on Monday after the collapse of First Republic Bank (FRC). ETH pulled back to a low of $1,827 as investors also waited for the upcoming interest rate decision by the Federal Reserve. It remains about 107% above the lowest level in 2022.
The biggest financial news on Monday was the collapse of First Republic Bank, the second-biggest bank to fall in the US. This collapse happened a week after the company announced that it lost over $100 billion in the first quarter. In a statement, FDIC said that the company will be acquired by JP Morgan, the biggest company in the US.
The collapse of First Republic makes 2023 the worst year for banks since the 2008 financial crisis. We have seen banks like Signature, Silicon Valley Bank, Credit Suisse, and Silvergate Bank collapse.
These collapses are positive for Ethereum and other cryptocurrency prices for two reasons. First, the collapse could mean that many people will move to cryptocurrencies like Bitcoin and ETH. While Bitcoin will benefit more in this transition, other altcoins like Ethereum will also benefit since cryptocurrencies have a positive correlation.
Second, the collapse means that the Federal Reserve will likely consider the health of the banking sector when it starts its meeting on Tuesday. Minutes published last month showed that several officials were concerned about the banking crisis.
Therefore, there is a likelihood that the Fed will consider pausing its interest rates in this meeting. The alternative is that the bank will decide to hike rates by 0.25% and then point to a strategic pause in the near term.
A change of tune by the Federal Reserve will be bullish for Bitcoin and Ethereum prices. Historically, cryptocurrencies tend to do well when the Fed is pivoting.
The daily chart shows that the ETH price has been in a bullish trend in the past few weeks. The coin has moved above the 50-day and 25-day exponential moving averages. This is a bullish sign. It has moved above the ascending trendline shown in green.
It has also moved slightly below the key resistance level at $2,032, which was the highest point on August 12 last year. It is at the 23.6% Fibonacci Retracement level. Therefore, there is a likelihood that Ethereum will have a bullish breakout as buyers target the key resistance point at $2,500.
Binance is one of the largest cryptocurrency exchanges in the world. It is better suited to more experienced investors and it offers a large number of cryptocurrencies to choose from, at over 600.
Binance is also known for having low trading fees and a multiple of trading options that its users can benefit from, such as; peer-to-peer trading, margin trading and spot trading.
Bitpanda is a digital assets brokerage company.
It has grown to become one of the most popular crypto exchanges in the world, as it offers a user-friendly interface, it has developed a bunch of great features and it offers a variety of coins to invest in.
Bitpanda has also built a reputation for security, and it has never experienced a hack of its data before.
Since the collapse of Silicon Valley Bank, several industry stakeholders have been doing all they can to help cushion the pangs in the firm to help prevent it from collapsing.
Regional banks in the United States might have recorded their worst month ever this March, the surviving ones, including First Republic Bank (NYSE: FRC). At the time of writing, the shares of First Republic have jumped by 15.72% to $14.28 in a move that appears as though it wants to start paring off the losses it has accrued from that time to date.
First Republic Bank has been under intense pressure since the collapse of Silicon Valley Bank (SVB) earlier this month. SVB has a similar business model as First Republic, further intensifying the fears in the heart of both investors and daily customers. The strain observed in SVB was extended to Signature Bank with Federal Regulators closing both banks as withdrawals mounted.
The rebound in the shares of First Republic can be said to be fueled by the report that regulators are planning to extend support for the bank pending when it secures its own buyer in the short to mid-term. It was also reported that the strain being felt by these regional banks is wearing off, sending the shares of most FRC rivals up in consonance.
The shares of Los Angeles-based regional bank PacWest Bancorp (NASDAQ: PACW) recorded a 4.08% upsurge and is changing hands at $9.94 at the time of writing. Phoenix, Arizona-based Western Alliance Bancorporation (NYSE: WAL) was also not left behind as its price ticked upward by 4.70% to $34.70.
Should these regional banks continue on this impressive streak, we may see the majority close March on a more positive growth note than envisaged.
Since the collapse of Silicon Valley Bank, several industry stakeholders have been doing all they can to help cushion the pangs in the firm to help prevent it from collapsing.
As reported by Coinspeaker, the regional bank recouped a lot of the losses it accrued when a group of major financial institutions in the US rallied around and deposited a total of $30 billion to help show they have confidence in the bank.
The banks who supported the struggling bank include Wells Fargo (NYSE: WFC), Citigroup Inc (NYSE: C), Bank of America (NYSE: BAC), and JPMorgan Chase & Co (NYSE: JPM) – each pledging $5 billion. The duo of Goldman Sachs Group Inc (NYSE: GS) and Morgan Stanley (NYSE: MS) agreed to deposit $2.5 billion.
Additionally, a total of five other banks also pledged to contribute $1 billion each to help First Republic. These categories include Bank of New York Mellon (NYSE: BK), State Street Corporation (NYSE: STT), US Bancorp (NYSE: USB), PNC (NYSE: PNC), and Truist (NYSE: TFC).
The ultimate bailout also involved reimbursing every depositor in case there is a liquidity shortage as both federal regulators and private stakeholders are putting hands on deck to bail out their rivals. This also shows the strength and coordination in the American banking industry.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
First Republic recently saw its shares jump 20% as the market still recovers from the collapse of Silicon Valley Bank.
The shares of First Republic Bank (NYSE: FRC) spiked 40% on Tuesday. FRC’s ascension also came amid an ongoing rebound among other regional banks from yesterday’s sell-off. On Monday, the SPDR S&P Regional Banking ETF (KRE) declined by 12.3% to record its most significant one-day loss in three years.
First Republic’s executive chairman Jim Herbert recently said in a media session that the bank was operating as usual. Furthermore, Herbert added that First Republic was not experiencing significant outflows nor mass depositor exodus.
Regional banks plummeted sharply on Monday as a spillover effect from the bankruptcy of Santa Clara-based Silicon Valley Bank. At the time, US regulators also went to great lengths to backstop all depositors in the sunken commercial bank.
Early Tuesday, First Republic shares ranked among the best-performing entities in the SPDR S&P Regional Banking ETF. The exchange-traded fund was up 5% during a premarket session which also saw all-round increases from other names. These include PacWest (NASDAQ: PAWC), which surged approximately 30%, and KeyCorp (NYSE: KEY), which gained 15%. In addition, the shares of Salt Lake City-based bank holding company Zions Bancorporation (NASDAQ: ZION) advanced 10% in Tuesday’s premarket trade. Meanwhile, multifaceted, multinational Charles Schwab (NYSE: SCHW) also rebounded by 8% during the same period after suffering a 12% slide Monday.
During the drawdown yesterday, Charles Schwab defended the bank’s portfolio and eased fears of a banking crisis. According to Schwab, “focusing attention on unrealized losses within HTM (Held-to-Maturity portfolio) has two logical flaws. First, those securities will mature at par, and given our significant access to other sources of liquidity, there is very little chance that we’d need to sell them prior to maturity (as the name implies).”
Furthermore, Charles Schwab, which currently seems unlikely to offload HTM securities to meet deposit withdrawal requests, also added:
“By looking at unrealized losses among HTM securities, but not doing the same for traditional banks’ loan portfolios, the analysis penalizes firms like Schwab that in fact have a higher quality, more liquid, and more transparent balance sheet.”
On Monday, First Republic plunged 60% to lead the decline in bank stocks despite the government’s backstop of Silicon Valley Bank. The bank was among the beneficiaries that had received extra liquidity from the Federal Reserve and New York-based banking giant JPMorgan (NYSE: JPM).
Nonetheless, First Republic recorded its worst week in a decade after seeing multiple portfolios pulling out their funds. During this period, the company traded at $81.10 per share.
Founded in 1985, First Republic operates as a full-service bank and wealth management entity. The company’s extensive suite of services includes personal banking, business banking, and wealth management services. These services cater to low-risk, high-net-worth individuals (HNWIs) and seek to provide a personalized customer experience.
First Republic also delivers relationship-based services via preferred banking or trust offices in the US.
First Republic is headquartered in San Francisco and operates in New York City and Jackson, Wyoming.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Shares of First Republic Bank (FRC) have been in the red for the past year, shedding more than 48% in the last twelve months.
The shares of American foreign exchange company First Republic Bank (NYSE: FRC) plunged over 60% in pre-market trading due to investors’ worries about its financial strength. Meanwhile, the bank has been addressing concerns about its liquidity following the unfortunate incident with Silicon Valley Bank (NASDAQ: SVBB). The SVB challenge started when it proposed a $1.25 billion offering of its common stock to shore up its balance sheet. The company had said on March 8 that the proceeds would be diverted towards the $1.8 billion hole caused by a loss-making portfolio sale. The offering raised questions driving investors to panic, and the bank reached its lowest level since 2016.
After, CEO Gregory Becker reached out to clients to assuage their fears and assure them of their funds’ security with the bank. However, multiple portfolios began to pull out their funds from Silicon Valley Bank, resulting in a massive selloff in the banks’ stock. The company recorded its worst week in 10 years, trading at $81.10 per share.
First Republic Bank saw its shares fall 15% as SVB experienced a rapid cash outflow last week. The company dropped further, losing over 50% as the Federal Deposit Insurance Corporation (FDIC) shut down Silicon Valley Bank. Investors’ concern about the foreign exchange company remains despite the company’s assurance. First Republic Bank saw its shares drop following the declaration of unused liquidity. The company revealed over $70 billion in unused liquidity to fund operations from an agreement that included financial services company JPMorgan Chase & Co (NYSE: JPM) and the US Central Bank. The bank also assured of the availability of additional liquidity via the Fed’s new lending facility. It explained:
“The additional borrowing capacity from the Federal Reserve, continued access to funding through the Federal Home Loan Bank, and ability to access additional financing through JPMorgan Chase & Co. increases, diversifies, and further strengthens First Republic’s existing liquidity profile.”
Shares of First Republic Bank (FRC) have been in the red for the past year, shedding more than 48% in the last twelve months. The company has also lost 32.92% since the year started and plunged further by 31.78% in the last three months. Over the past month, First Republic Bank has plummeted more than 40% and missed 33.02% in the last five days. With a market valuation of nearly $15 billion, the American full-service bank and wealth management company’s stock trades down 63.42% to $29.91. This follows a close of $81.76.
Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience.
Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.