Bitcoin’s price rose above $29,000 on Wednesday morning as shares in First Republic Bank fell 50%. According to CoinGecko data, Bitcoin hit a high of $29,173 and is currently trading at just under $28,950, marking a 5.7% increase on the day. Despite the recent rally, the cryptocurrency remains down 4.7% for the week.
First Republic Bank, a San Francisco-based lender, experienced a significant decline in its shares on Wednesday following the release of its quarterly report. The report highlighted higher-than-expected withdrawals of over $100 billion in March, which sparked concerns about the bank’s solvency.
This recent news has raised fears of a new banking crisis in the US, with the country’s banking sector facing several challenges in recent months. Signature Bank and Silicon Valley Bank both collapsed due to insolvency earlier this year, leading to increased interest in Bitcoin as a safe-haven asset.
BitMEX CEO Arthur Hayes also recently discussed Bitcoin’s value proposition as a hedge against risks associated with the traditional banking system, stating that individuals should invest in hard assets such as cryptocurrency or gold.
Bitcoin’s positive move comes amid a decline in top stock market indices such as the S&P 500 and Nasdaq 100, which both suffered significant losses on Tuesday. Bitcoin’s correlation with the stock market has dropped since the beginning of April, while its correlation with gold has grown stronger.
Bitcoin’s price increase can also be attributed to the possibility of fresh liquidity injections into the market from the Federal Reserve or other institutions in light of the uncertainty surrounding First Republic Bank. Although this has led to buying interest in Bitcoin, there is no guarantee that liquidity will come into the market in this instance.
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