• First Republic Bank has recently been acquired by regulators, resulting in the third major bank failure of this year.
• The banking crisis narrative appears to be a boon for bitcoin, with the market lacking positive near-term catalysts but having supportive supply narratives.
• Bitcoin and Ether have started 2023 inorganically cheap, allowing room to move higher due to the contrast between their decentralized nature and the widening banking crisis.
First Republic Bank’s Failure
Bitcoin endured a small dip in early May after it was revealed that First Republic Bank had been acquired by regulators. This marks the third major bank failure this year, following Signature, Silvergate, and Silicon Valley. Most of its assets and deposits were circulated to institutions like JPMorgan Chase.
Impact on Bitcoin
Alex Thorn – head of firmwide research at Galaxy – commented on how this banking crisis has created a new “safe haven” status for bitcoin and other digital currencies as people seek out ways to keep their wealth stable during this uncertain time. As a result, many currencies have seen increases in their value that they never saw before.
Thorn noted that there are still supply issues overhanging bitcoin but accumulation by small addresses is outpacing issuance while Ethereum staking is expected to increase which provides a supportive supply narrative overall.
The macro environment also looks set to back up bitcoin with tightening, recession likely coming around the corner along with an expanding multipolarity in the global economy which could all be supportive of gold and bitcoin prices moving forward.
Overall, it would seem that bitcoin stands to benefit from this current banking crisis as more people turn towards it as a safe haven during these turbulent times as well as its underlying supply narrative being strong enough to take advantage of any potential macroeconomic shifts ahead.