Bitcoin At $28,600, First Republic Sold To JP Morgan
After the price of Bitcoin dipped below $28,500 late Sunday evening (EST), the expected recovery in response to the First Republic Bank (FRC) seizure failed to materialize. While recent bank failures have generated upward momentum for Bitcoin, the price is currently hovering around $28,600.
First Republic sold to JP Morgan
Over the weekend, attempts were made to prevent the First Republic Bank from collapsing. A few hours ago, the US Deposit Insurance Corporation found a solution: JP Morgan Chase will buy FRC. The banking giant will take over the assets of First Republic Bank.
California Department of Financial Protection and Innovation (DFPI) announced that deposit insurer Federal Deposit Insurance Corporation (FDIC) accepted JPMorgan’s offer to take over the struggling regional bank. First Republic branches will reopen as JPMorgan Chase.
Remarkably, even US law was set aside for this, as US banks are not allowed to make acquisitions that would earn them more than 10% of US deposits. As The Kobeissi Letter wrote, JP Morgan already owned 16.1% of all US bank deposits before the deal. So the biggest bank in the US becomes even bigger.
Percentage of deposits controlled by US banks:
1. JP Morgan: 16.1%
2. Bank of America: 14.8%
3. Wells Fargo: 10.9%
4. Citibank: 5.8%
5. US Bank: 3.4%
6. Truista: 3.4%
7. PNC Bank: 3.3%
8. TD Bank: 2.9%
9. Charles Schwab: 2.7%
10. Capital One: 2.6%
The 15 largest banks control 75% of…
— The Kobeissi Letter (@KobeissiLetter) April 30, 2023
According to insider information, half a dozen banks participated in the bidding process for First Republic Bank, including Citizens Financial and PNC Financial Services. JPMorgan will take over all of First Republic’s remaining $103.9 billion in deposits and will buy most of its $229.1 billion in assets, the FDIC announced.
Under the agreement, the FDIC will split the losses with the bank. The agency estimated that its insurance fund would take a $13 billion hit to the business.
Bitcoin price remains below $29,000
In the Bitcoin and crypto community, the collapse of First Republic Bank caused not only schadenfreude, but also hope for a rise in price. As with the first wave of bank failures in the United States, there was hope that the bailout would increase the liquidity of the financial system.
BitMEX founder Arthur Hayes he wrote The problem with the FRC upfront is that its balance sheet contains few government bonds and many other assets, such as commercial real estate loans, which were not adequate collateral for the Bank Term Funding program.
So unless some muppet bank decides to bail out the FRC, expect over the weekend the Bank Term Financing Program will be expanded to allow other types of loans to be eligible to be exchanged for freshly printed dollaz.
And then $BTC will have another upside as another trillion dollars is added to the tab. Money Printer Goes Brrr!!!
Unfortunately for Bitcoin investors, this did not happen, as JP Morgan was given special permission to take over the FRC. At press time, Bitcoin price was at $28,574, stabilizing after Sunday’s drop.
Featured Image from iStock, chart from TradingView.com