US Government Considers Bailing Out First Republic Bank- Will BTC’s Price Surge?

Since news broke out that First Republic Bank was on the brink of collapse, the US federal government and other banking giants have been reluctant to inject funds to salvage the situation. However, recent reports indicate that the government is ready to shift grounds and has initiated a discussion on a possible rescue package for the troubled bank.

Possible Rescue And Bitcoin Rally

The reports further indicate that the discussion will likely be positive for the leading crypto asset (Bitcoin). Market observers noted that if the talks about the rescue effort succeed, history will repeat itself for Bitcoin regarding a price surge.

Bitcoin saw a sudden price surge after First Republic Bank released its quarterly report earlier in the week. This sudden price surge suggests that the previous trend from March is about to repeat itself.

It is worth mentioning that the banking crisis triggered by the fallouts of Silicon Valley Bank (SVB) and Silvergate Bank led to a further uptrend for Bitcoin. As a result, the recent move to rescue First Republic Bank would be another scenario to boost the asset’s upward trend and cast more doubt in the banking system.

A previous attempt led by the bank’s advisors in collaboration with the private sector has yet to yield positive outcomes before the intervention of the United States government. Sources familiar with the development revealed that the Federal Deposit Insurance Corporation (FDIC), Federal Reserve, and the Treasury Department are all involved in the negotiations.

US authorities reportedly planned several meetings with some financial institutions to create a bailout fund for the bank. Additionally, another bailout is expected to come up over the weekend to lessen the impact of First Republic Bank’s contagion on the traditional finance ecosystem.

Private Sector To Drive Bailout

Furthermore, several anonymous sources noted that the government’s involvement in the bailout talks would likely draw other private sector players to the negotiation table. In addition, the government would favor a deal with the private sector, given the significance of the issue.

However, an agreement is yet to be reached by the parties involved. According to those familiar with the matter, the US government believes that a private sector-driven solution will better address the issue rather than placing the troubled bank under the supervision of the FDIC.

However, the parties involved are yet to release any public statement regarding the progress of the discussions, which may be because an agreement is currently not in place. Meanwhile, the most challenging aspect of the negotiation is other major banks’ involvement.

Based on its first quarterly report, First Republic Bank witnessed devastating bank runs. According to the bank, customers have withdrawn almost $100 billion in deposits over the last 30 days.

Thanks to the intervention of other banks who injected $30 billion into First Republic Bank in March. Otherwise, the worst would have happened to one of the foremost crypto-friendly banks.

Over the past seven days, Bitcoin has recorded a nearly 4% surge, according to current Coingecko data, with investors and traders anticipating further gains by the weekend. Bitcoin currently trades at $29,290 as the crypto market awaits the release of the Personal Consumption Expenditures Price Index.

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