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Home Cryptocurrency

Bitcoin pulls back to start May as First Republic Bank saga comes to an end

by Suneela Zulfiqar
May 2, 2023
in Cryptocurrency
Reading Time: 2 mins read
Bitcoin pulls back to start May as First Republic Bank saga comes to an end
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To kick off the week and the new month, cryptocurrencies faced a decline on Monday as investors speculated that the takeover of First Republic Bank could potentially signal an end to the ongoing financial crisis, which has been a major driving force behind this year’s bitcoin rally.

Bitcoin, according to Coin Metrics, experienced a drop of approximately 4.2% to $28,137.76 at the beginning of the week and month. Ether also saw a decline of 4% to $1,828.81.

Regulators took control of First Republic on Monday, marking it as the third U.S. bank failure this year and the largest one since the 2008 financial crisis. JPMorgan Chase is set to acquire a majority of the bank’s deposits and assets.

Last week, the price of bitcoin rallied as issues at the bank unfolded. However, cryptocurrency trading has been volatile as investors grapple with the impact of the banking crisis on crypto, along with concerns about high inflation, Federal Reserve policies, a potential recession, and a growing bearish sentiment surrounding the U.S. dollar.

Alex Thorn, head of firmwide research at Galaxy, stated, “It’s uncertain whether the banking crisis narrative can continue to be advantageous for bitcoin. Overall, the market lacks clear positive short-term catalysts, with supply issues weighing on bitcoin… That being said, bitcoin accumulation by small addresses is outpacing issuance, and we anticipate an increase in Ethereum staking, both of which provide a supportive supply narrative.”

Thorn added, “Beyond factors specific to the crypto market, we expect the macro environment in the latter part of the year to be characterized by tightening, recession, and an expanding multipolarity in the global economy, all of which can be supportive of gold and bitcoin.”

While investors anticipated a slowdown in bitcoin’s first-quarter rally, the cryptocurrency remains on an upward trend and has gained approximately 70% year-to-date, after experiencing a decline of over 60% last year. April marked the first time in two years that bitcoin achieved four consecutive positive months.

“Bitcoin and ether started 2023 at low valuations, which allowed for plenty of room to rise off a low-base effect,” Thorn explained. “A deepening banking crisis became evident in March, and the contrast with bitcoin’s transparent and decentralized nature provided further support for bitcoin, while Ethereum’s successful Shanghai upgrade served as a catalyst for ethereum.”

Tags: BitCoinCryptocurrencylatestRepublic Bank
Suneela Zulfiqar

Suneela Zulfiqar

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