Erik Weijers, a month ago
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.
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 When these people started withdrawing en masse (70 billion was withdrawn in the first quarter of 2023), it proved too much for the bank to keep afloat.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.
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.
May 03, 2023
Today was the big day, and many traders spent their time in front of their screens waiting for Jerome Powell's speech during the press conference. Another FOMC meeting concluded, and another interest rate hike was announced.
Apr 25, 2023
The U.S. government reached its self-imposed debt limit or debt ceiling of $31.4 trillion (!) in January 2023. This has forced the US Treasury measures to 'pay out of pocket' to keep the government keep its obligations. The political uncertainty surrounding this debt ceiling is the reason the insurance premium against the US going bankrupt is at the highest price ever.
Apr 24, 2023
It has been more than six weeks since Silicon Valley Bank had to be shut down. Much to everyone's surprise, the banking system hasn't seen large trouble since. So, was it all much ado about nothing? There are clear signs that the banks are suffering, which is bad for the economy.
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