Bitcoin about to rally? The US government will bail out the First Republic

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Breaking News: As Reuters just reported, US officials are currently coordinating urgent talks to save the struggling First Republic Bank (FRC) for Bitcoin, this could mean a rally again if history repeats itself as it has done in recent weeks. Already on Tuesday, BTC saw a sudden rally after the First Republic Bank released its quarterly report with devastating numbers.

So the narrative that first surfaced on March 10 has repeated itself. After the collapse of Silicon Valley Bank and Silvergate, news of a bank failure triggered several upward moves in Bitcoin. And First Republic Bank could be another argument bolstering trust in Bitcoin and eroding trust in the banking system.

This is why Bitcoin was created

While private sector efforts led by advisers to the banks have yet to yield an agreement, US officials have now apparently intervened in the situation surrounding First Republic Bank, Reuters reports. According to three anonymous sources, the Federal Deposit Insurance Corporation (FDIC), the Treasury Department and the Federal Reserve are involved in the talks.

Authorities have reportedly started planning meetings with financial firms to organize a bailout in recent days. Remarkably, a bailout could again take place over the next weekend to lessen the impact on the traditional financial system.

According to unnamed Reuters sources, the involvement of governments is likely to help bring more parties to the negotiating table, including banks and private equity firms. However, the US government would welcome a deal with the private sector, but engagement is still not ruled out.

U.S. officials believe a private sector solution would be preferable to the First Republic’s FDIC receivership, according to two of the sources.

We are in discussions with multiple parties about our strategic options as we continue to serve our customers, First Republic said in a statement. Meanwhile, the FDIC, Treasury Department and Federal Reserve remained silent.

In the end, the parties involved did not make a decision on how to proceed. According to Reuters, an agreement is still not certain. Perhaps the most problematic aspect of the involvement of other large banks is the initial situation.

As the quarterly report for the first quarter shows, the run on the bank has been more dramatic than previously thought. The bank had reported that customers withdrew nearly $100 billion in deposits in March. It is only because other major banks stepped in with $30 billion in March that the worst has been averted for the time being. But even that was not enough.

At press time, Bitcoin price was $29,454. Today marks the most important day of the week for the market with the release of the Personal Consumption Expenditure (PCE) Price Index at 8:30 a.m. EST (2:30 p.m. CET).

February core PCE was +0.3% on a monthly basis, below the +0.4% forecast. For March, analysts expect an unchanged increase of +0.3%. On a yearly basis (YoY), an increase of 4.5% is expected, compared to 4.6% the previous month. If the underlying inflation rate drops, a bullish response in the Bitcoin market is expected.

BTC price, 4 hour chart | Source: BTCUSD on TradingView.com

Featured image from iStock, chart from TradingView.com

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