- First Republic stock price has become a penny stock.
- The company that catered to the wealthy customers.
- Bitcoin has emerged as a safe haven during bank collapses.
FRC stock price continued plunging on Wednesday as concerns about the company continued. Shares of First Republic Bank dropped to a record low of $4.82, meaning that they have lost over 90% of value in the past few weeks. As a result, Bitcoin price soared by over 8% as investors rushed to its safety.
FRC stock price plunged
First Republic Bank could be heading towards receivership as its share price plunges. The bank has been in a near-death sentence in the past few weeks following the collapse of Silicon Valley Bank and Signature Bank.
It has been at risk because of the shares of uninsured deposits in its ecosystem. As a result, many depositors rushed to withdraw their funds following the collapse of these other banks. That happened since most of their funds were not insured by the FDIC.
On Monday, the company said that it had lost more than $100 billion in deposits. It also said that it would layoff thousands of staff and start shopping for strategic alternatives. However, there have been no suitors because of the potential losses they will need to take. Also, American regulators see opposed to any major bank mergers.
Therefore, with the shares plunging, I suspect that more outflows will continue, which will push the FDIC to intervene. Its intervention will likely involve selling the company as it did with Silicon Valley Bank.
Bitcoin as a safe haven
An important situation is that Bitcoin has emerged as safe haven when there are bank crashes. We saw it jump sharply when SVB, Credit Suisse and Signature Bank collapsed a month ago. This happens for two main reasons.
First, Bitcoin is a safe haven that is an alternative to gold. Investors believe that BTC will do well when other centralized banks crash. Second, a crisis in the banking system could push the Federal Reserve to start pivoting faster than expected.
If First Republic collapses, it means that the Federal Reserve will likely not hike interest rates in May. The most recent minutes showed that some Fed officials supported pausing rate hikes in a bid to observe the performance of the banking sector.
Therefore, as I wrote on Tuesday, the outlook of Bitcoin price is bullish, with the next key level to watch being at $31,000, which was the highest point this year. This price is about 45 above the current level. A move above that level will see it jump to the key level at $35,000.
