Crypto Markets Take Advantage of First Republic Bounce

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Bitcoin’s breakout performance in 2023 was partly the result of turmoil in traditional financial markets following a series of crises that hit Silicon Valley Bank, Signature Bank and, most importantly, Credit Suisse.

A run on deposits saw investors turn to what they saw as safe-haven assets to hedge against further TradFi turmoil, with gold and bitcoin singled out as near-term saviors.

Bitcoin has soared as high as US$31,000, an 80% increase since the start of the year in mid-April, only to correct quite sharply to around 27,000 earlier this week.

Yet the specter of TradFi’s volatility has surfaced again in the form of earnings from First Republic Bank (NYSE:FRC) – one of America’s leading regional companies and one of the most exposed to collapse. SVBs.

Shares of First Republics fell like a rock on Tuesday after reporting record deposit outflows of 40% to $104.5 billion in its latest quarter, much worse than consensus estimates.

Conversely, bitcoin rose nearly 3% following the First Banks disclosures, which looks like an inverse relationship to the perceived health of mid-tier US financial sectors. As of this writing, the BTC/USDT pair is changing hands at US$28,700.

Bitcoin back above 30k? Source: currency.com

While open interest in the derivatives market has not materially increased, the rise in the spot price of Bitcoin has involved a rush of inflows as investors seek to diversify.

Ethereum (ETH) joined yesterday’s rally adding 1.3% to US$1,870, with a gradual reversal to US$1,860 during the Asian trading session this morning.

ETH’s post-Shanghai price rally has been largely reduced, but the world’s second-largest cryptocurrency appears to be consolidating around the 1.8000 mark, where substantial buying support is evident in the book. Binance orders.

Week after week, ether underperformed bitcoin, with 8% accumulated losses against bitcoin’s 3.5%.

Global cryptocurrency market capitalization rose 2.7% to US$1.18 billion at the close of trading in Asia.

Binance abandons Voyager Digital

Separately, Binance.US dropped its plan to buy the assets of bankrupt crypto lender Voyager Digitals for US$1 billion, less than a week after the courts gave it the green light.

The reason, according to Binance.US, was as follows: the hostile and uncertain regulatory climate in the US has introduced an unpredictable operating environment that impacts the entire US business community.

Voyager called it a disappointing development, but said it would now move quickly to return value to customers through direct distributions.

This is the second failed deal for Voyager, which was one of the most publicized meltdowns throughout the crypto winter of 2022.

FTX initially agreed to buy the group, but that deal fell through for reasons I don’t need to explain.

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