Bitcoin edges towards $30000 – The Federal Deposit Insurance Corporation (FDIC) is getting closer to seizing another bank, indicating that the second wave of the banking crisis is currently underway. The price of Bitcoin has been positively impacted by this.
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Bitcoin Price Surges Amidst a Weakening US Banking System
The current price of bitcoin is demonstrating why it is deserving of its reputation as a “safe haven” in light of the growing issues with the US banking system. The cryptocurrency industry is still thriving despite the general bearishness in the market and in stocks as well.
PacWest Bancorp declared today that it is considering its alternatives, including a possible sale, after First Republic Bank. Before the ticker recovered by the end of the trading day, this caused the value of the bank’s stock to drop by almost 55%.
Other regional banks suffered as a result of PacWest Bancorp’s decline; some even experienced declines of over 25%.
US Regional Bank Stocks After Hours:
1. PacWest, $PACW: -60%
2. Western Alliance, $WAL: -30%
3. Metropolitan Bank, $MCB: -20%
4. Valley National, $VLY: -15%
5. HomeStreet, $HMST: -11%
6. Zions Bank, $ZION: -10%
7. KeyCorp, $KEY: -8%
8. Citizens Financial, $CFG: -5%…
— The Kobeissi Letter (@KobeissiLetter) May 3, 2023
So, while the banking industry suffers on the one hand, the Federal Reserve claims that the banking system is “sound and resilient” on the other. The government appeared to believe there was nothing wrong with the banking industry in a statement following the Federal Funds Rate’s 25 basis point (bps) increase on May 3.
The majority of the market did not appear to agree with this, as investors drew attention to the statement’s irony and absurdity in light of recent events.
One bank failing doesn't mean the banking system is unsound. $SIVB
Two banks failing doesn't mean the banking system is unsound. $SBNY
Three banks failing doesn't mean the banking system is unsound. $FRC
Four banks failing doesn't mean the banking system is unsound. $PACW
— Erik Voorhees (@ErikVoorhees) May 3, 2023
Wall Street Silver, a group of investors and analysts, predicted that the bank would close by Friday and may be sold off. The Kobeissi Letter, another well-known critic, outlined the reasons why the bank might not be acquired right away but instead go through the same procedure as First Republic Bank.
PacWest, $PACW, is now down 60% after hours on news that they are looking for a potential buyer.
It is unlikely anyone will buy PacWest because of the precedent that the FDIC has set.
Why would a large bank buy a smaller bank before the FDIC seizes it?
If they wait for the…
— The Kobeissi Letter (@KobeissiLetter) May 3, 2023
The likelihood of this happening at the next meeting is now 85%, but it is anticipated that the Fed would delay raising interest rates in light of the banking crisis. As a result of the recent 14 interest rate increases, borrowing has become quite expensive.
Bitcoin edges toward $30000
The price of Bitcoin, which is currently trading at $28,946, is edging closer to $30,000 amidst this pandemonium. Green candlesticks and an increase in the cryptocurrency’s social dominance together signal that investors are becoming more interested in alternative currency.
Over the last ten days, the network has gained close to one million new users, which is pretty significant for Bitcoin. This is due to the fact that, according to prior cases, the network typically requires at least two months. With 45.3 million users overall, Bitcoin has added more users in the last few days than it did in March and April combined.
Simply put, all of the aforementioned examples point to faster growth and greater interest in cryptocurrency’s potential, which would surface as long as the US banking industry is contracting.
