Home / Technology / Bitcoin retreats at the beginning of May after the resolution of the First Republic Bank situation

Bitcoin retreats at the beginning of May after the resolution of the First Republic Bank situation

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Bitcoin retreats at the beginning of May after the resolution of the First Republic Bank situation

On Monday, cryptocurrencies experienced a decline at the start of the week and the new month. This occurred as investors speculated that the acquisition of First Republic Bank could signal an end to the financial crisis, which has been a major contributor to the recent bitcoin rally. According to Coin Metrics, bitcoin dropped by approximately 4.2% to 28,137.76, while Ether decreased by 4% to 1,828.81.

Regulators seized control of First Republic on Monday, marking the third U.S. bank failure this year and the largest since the 2008 financial crisis. JPMorgan Chase will acquire the majority of the bank’s deposits and assets.

The price of Bitcoin experienced a rally in the final week of April as the troubles at the bank unfolded. However, trading of the cryptocurrency has been choppy as investors balance the impact of the banking crisis on crypto with concerns over high inflation, Federal Reserve policy, a potential recession, and an increasingly bearish narrative surrounding the U.S. dollar.

“It’s unclear whether the banking crisis narrative can continue to be a boon for Bitcoin,” said Alex Thorn, head of firmwide research at Galaxy. “Overall, the market lacks clear positive near-term catalysts, with supply issues overhanging bitcoin … That being said, bitcoin accumulation by small addresses is outpacing issuance, and we expect Ethereum staking to increase, each of which provides a supportive supply narrative.”

“He added that apart from factors that are specific to the crypto market, they anticipate a macro environment towards the end of the year to be defined by a tightening of the economy, a recession, and a growing multipolarity in the global economy, all of which can support gold and bitcoin.”

Despite expectations of a slowdown from its first-quarter rally, bitcoin continues to trend upward, having gained approximately 70% this year after experiencing a decline of over 60%. In April, bitcoin achieved its fourth consecutive positive month, a feat it had not accomplished in two years.

Thorn stated that “Bitcoin and ether began 2023 at a low price point, which created room for significant upward momentum due to the low-base effect.” He also said that “As the banking crisis deepened in March, the transparency and decentralized nature of Bitcoin became increasingly attractive to investors, providing further support for the cryptocurrency. Additionally, Ethereum’s successful Shanghai upgrade served as a catalyst for its price increase.”

About Rajesh Parmar

Rajesh Parmar

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