The slump in Cryptocurrency Due to Bank Collapse

The slump in Cryptocurrency Due to Bank Collapse

Cryptocurrencies declined on Monday to start the week and a new month as investors bet on the acquisition of First Republic Bank could stop the financial crisis that was the main driver of this year’s Bitcoin rally.


According to Coin Metrics. Bitcoin is down by about 4.2% to 28,137 at the start of the week and the new month. Ether declined by 4% to 1,828.82.


Regulators took over the First Republic on Monday, making it the third US bank failure this year and the biggest since the 2008 financial crisis. JPMorgan Chase will resume most of its deposits and assets.


The price of Bitcoin surged last week of April due to banking issues. However, cryptocurrency trading has been volatile as investors grapple with the impact of the crypto crisis with high inflation, Federal Reserve rules, a possible recession, and an increasingly bearish narrative surrounding the US dollar.


“it is unclear if the banking crisis can keep being a boon for Bitcoin,” Alex Thorn said, Galaxy’s head of firmwide research. He says the market lacks clear and positive near-term catalysts as supply issues threaten Bitcoin. However, the accumulation of small addresses of Bitcoin is about to issue. Expect Ethereum prices to rise, each providing a favorable supply narrative.


“In addition to native crypto factors, we expect the year-end macro environment to be characterized by recession, tightened and growing multipolarity in the global economy, which could support gold and Bitcoin,” he added.


Investors had been expecting a slowdown after Bitcoin’s rally in the first quarter, though the cryptocurrency remains on an uptrend, gaining about 70% in a year after closing over 60%. April noted the first time in two years that Bitcoin had a fourth consecutive positive month.


In 2023, Bitcoin and Ether started 2023 inorganically cheap, leaving plenty of room for a low base effect to the upside. The deepening of the banking crisis became evident in March, and the contrast with Bitcoin’s transparent and decentralized nature gave Bitcoin an added advantage, while the successful modernization of Ethereum in Shanghai catalyzed Ethereum.


Other Outcomes of The Collapse

Cryptocurrencies aren’t the only movement challenging the authority of mainstream regulators and central banks. Many will see the First Republic bailout as another example of privatizing earnings and socializing losses.