Erik Weijers, a month ago

First Republic Bank bust and acquired by JPMorgan

Being believers in crypto we favor decentralization, so we don't like the current developments in the USA. Another relatively smaller bank went bust and will be acquired by JPMorgan, the biggest bank of the country. 

"Uncle Jamie wins again", was one of the comments seen on Twitter after the news broke that regulators have seized First Republic Bank and will sell it to JPMorgan. 'Jamie' refers to the CEO of JPMorgan Jamie Dimon, who sees his bank grow larger and larger. By the way, Dimon doesn't see the value of Bitcoin - even though various departments of JPMorgan are implementing blockchain integrations.

Banking crisis in slow motion

Last week, in our article about the banking crisis unfolding in slow motion, we wrote:  

'Currently, we don't have signs that there are US or EU banks on the brink of collapse. There are no bank runs. But there are 'bank walks'. Slowly but surely, week after week, banks witness large deposit outflows.'

Unfortunately, we didn't have to wait long before another bank run unfolded. First Republic Bank specializes in private banking that targets wealthier people. When these people started withdrawing en masse (70 billion was withdrawn in the first quarter of 2023), it proved too much for the bank to keep afloat. 

Banks in the US suffer from interest rates that have risen sharply in the past year. They are stuck with long duration loans from before the rate hikes - such as low-yielding US Treasuries and mortgages. Not all banks have hedged against the risk of higher interest rates. Consequently, they can't offer their depositors 4% interest rates on their savings accounts. Depositors flee to money market funds that can offer those yields. That's the mentioned 'bank walk'.

The way US banks have gone bust with big intervals feels a bit like the days leading up to New Year’s Eve. The occasional sound of a lonely firecracker foreshadows the massive eruptions to come. But of course, the US government won't let it come to this point. A systemic collapse will be prevented at all costs. And 'all costs' means: a money printer that will churn out dollars at full speed. If and when that money printing scenario will unfold, it could be bullish for crypto.

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Ripple acquires Metaco and has plans for a CBDC platform

May 19, 2023

Ripple is still fighting the SEC in court over the question of whether XRP is a security or not. While it is expected that the lawsuit will come to an end this year, the company is making big moves on the international market. Recently the company acquired Metaco, one of the big players in institutional custody solutions for digital assets. The deal fits perfectly into the bigger picture. Ripple has always focused on providing solutions for international payments and remittances. Solutions that are meant for institutional customers and not retail clients.

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