The Bank of America (BofA) says that Ripple is an example of a company that is making an impact with blockchain and its use case for cross-border payments. In a recent report, BofA analysts say Ripple is an exception to blockchain’s relatively modest effect on international payments systems, particularly in the Asia Pacific (APAC) region. […]
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The four largest banks in the US now have a total of $205 billion in unrealized losses on their balance sheets, according to a new report. Bank of America, Wells Fargo, JPMorgan Chase and Citigroup have compiled the losses due to bad bets in the bond market, reports the Financial Times, citing fresh data from […]
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The Federal Reserve says more than half a trillion dollars will exit the American banking system in its “severely adverse” scenario. The Fed just released its annual bank stress test, which found large US banks would survive a severe recession. However, the results of the stress test show a group of 23 banking giants including […]
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JPMorgan Chase and Bank of America are defending their fraud prevention systems after a 76 year-old man lost his life savings of $800,000. Washington resident Bogdan Nalivaiko sold his home and placed nearly a million dollars in the bank when he was targeted by scammers, reports Fox 13 Seattle. According to Nalivaiko’s daughter, Julia Elders, […]
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Bank of America has warned that the key threats to the U.S. dollar’s dominance are largely domestic, as opposed to competition from other currencies, including a BRICS currency. “U.S. fiscal brinkmanship, with risks for government shutdown, or even worse a default, keeps coming up during debt ceiling discussions,” the bank’s analysts stressed. Bank of America […]
A Bank of America (BOFA) commodity strategist has postulated that gold, should it continue to flourish in 2023, could pave the way for a climb to $2,500 per ounce. Presently priced at $1,983 per unit, the precious metal remains just shy of the $2,000 threshold. However, if it were to achieve the projected $2,500 target, […]
The price of Bitcoin has bounced upwards as First Republic Bank deposit slump sparks fresh banking crisis fears in the United States.
The price of Bitcoin (BTC) spiked more than 3% in the last 24 hours as fears were sparked of another possible imminent bank failure as First Republic Bank (FRC) shares closed down more than 50% on April 25.
According to the Head of Research at Australian crypto education platform Collective Shift, the price of Bitcoin rallied immediately following Fox News Business Reporter Charles Gasperino breaking the news that bankers working with First Republic Bank expect the institution to go into government receivership.
#Bitcoin $BTC is up 2.4% in the last 90 minutes after @CGasparino breaks the news that bankers working with First Republic Bank $FRB "expect eventual govt receivership."
— Matt Willemsen (@matt_willemsen) April 25, 2023
Price was $27,500 at the time of the tweet and is now $28,150. pic.twitter.com/aSjzFXiip6
Receivership is a tactic allowing creditors to recover funds that are experiencing a potential default and assists troubled firms in avoiding bankruptcy.
Data from crypto analytics firm Santiment suggested the correlation between Bitcoin and the S&P500 may be dwindling as the narrative that Bitcoin is a safe haven amid the banking crisis began to once again gather steam.
Just minutes after US stock markets winded down their rough day, #crypto has had signs of life. With $BTC pushing for $28.5k & $ETH closing in on $1,900, these surges without reliance on the #SP500 are ideal for the market's independent sustainability. https://t.co/0XeNVf9Vaz pic.twitter.com/KeJ1408UiN
— Santiment (@santimentfeed) April 25, 2023
First Republic began experiencing issues in early March which led to 11 of the largest banking institutions in the United States, including J.P. Morgan and Bank of America Corp., depositing $30 billion at the troubled bank.
On March 26, Bloomberg reported that U.S. authorities were looking at creating an emergency lending facility to assist the bank in shoring up its ”structural challenges” with its balance sheet.
According to anonymous sources at the time, despite First Republic staring down the barrel of liquidity concerns, U.S. officials declared the bank’s deposits were “stabilizing,” and it was not at risk of experiencing “the kind of sudden, severe run” that led regulators to close down Silicon Valley Bank.
Unfortunately, these reassurances have proved incorrect.
On Monday, April 23, First Republic reported in its first quarter earnings call that total deposits had plummeted more than $100 billion and it would be “pursuing strategic options” to strengthen its financial standing as quickly as possible.
While the bank is yet to clarify exactly what these strategic options are, the earnings report highlighted that the embattled firm plans to downsize its balance sheet and cut expenses by slashing executive salaries, slimming down on office leases and laying off an expected 20% to 25% of its employees in Q2.
Related: Bitcoin price can ‘easily’ hit $20K in next 4 months — Philip Swift
The banking crisis has taken a heavy toll on financial institutions in the U.S. over the course of this year. On March 8, Silvergate Bank announced that it would be closing its doors after experiencing a run on deposits.
Two days later on March 10, Silicon Valley Investment Bank was shut down by the California Department of Financial Protection.
Despite the turmoil, U.S. Treasury Secretary Janet Yellen has reiterated that the American banking sector remains robust and stable. “Our banking system remains sound, with strong capital and liquidity positions,” Yellen stated in remarks from the Financial Stability Oversight Council (FSOC) Council Meeting on April 21.
Magazine: Unstablecoins: Depegging, bank runs and other risks loom
Bank of America and Fidelity have increased their MicroStrategy exposure in what appears to be a passive Bitcoin investment.
MicroStrategy's infamous Bitcoin (BTC) investment strategy is playing out profitably so far into 2023.
Today, MicroStrategy's stock MSTR is up roughly 140% year-to-date (YTD) to $350 per share, its highest level since September last year. It mirrored Bitcoin's 90% YTD gains, maintaining a strong positive correlation with the top cryptocurrency.
To recap, MicroStrategy is essentially a proxy for direct BTC investment without a spot Bitcoin exchange-traded fund (ETF) in the U.S. It holds 140,000 BTC worth $4.26 billion, the most by a publicly-traded company as a part of its Treasury strategy.
MSTR investors typically get their buying or selling cues from the same catalysts that drive Bitcoin market trends.
As a result, the stock has mirrored the BTC price uptrend so far in 2023, led by rush-to-safety trades amid the U.S. banking crisis and anticipation the Federal Reserve would stop hiking rates.
For instance, CNN data shows Bank of America's entities owns 86,147 MSTR shares. Similarly, Fidelity purchased 97,199 MSTR shares throughout 2022, suggesting growing institutional interest in proxy Bitcoin investments.
Coinbase's COIN, another stock offering indirect crypto exposure, has doubled in value this year as well.
MicroStrategy is essentially an enterprise software solution company and generates its revenue from software licensing and subscription services.
The firm realized a net loss of $193.7 million during Q4/2022, up from $137.5 million a year ago, led by a Bitcoin impairment loss of $197.6 million. Furthermore, its operating cash flow was $18.2 million compared to a positive cash flow of $3.2 million in the same quarter a year ago.
Revenue isn't what you're making it out to be. If a lemonade stand does $100M in revenue and spends $99,999,999 to generate that revenue, then a $1.00 profit isn't all that amazing.
— Alby (@albyva) April 2, 2023
Microstrategy isnt far from that example. Their expense to generate that revenue leaves them with… pic.twitter.com/ZhA80tWn3J
Of course, MicroStrategy could sell its Bitcoin holdings to boost its balance sheet reserves. But the company says it will not alter its BTC buying strategy under financial stress. Instead, it employs strategies like share dilutions and debt offerings to raise capital to buy BTC.
"The risk here will come from its inability to buy Bitcoin with positive cash flows in future quarters as per its strategy," says Pacifica Yield, financial blogger at Seeking Alpha, adding:
"Dilution to buy assets that you lose money on if Bitcoin returns to its near-term lows would not be a shareholder-friendly strategy."
From a technical standpoint, MSTR has a high probability of a 20% price correction in Q2.
Related: MicroStrategy’s Saylor fuses work email address with Bitcoin Lightning
The stock's yearly rally has landed its price near a resistance range — between $320 and $340 — notorious for capping breakout attempts. Suppose a pullback occurs. Then, the price could drop toward its 50-3D exponential moving average (50-3D EMA; the red wave) below $260 by June.
MicroStrategy is expected to release its Q1 earnings report by May 2.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Financial titans Fidelity and Bank of America are now indirect owners of Bitcoin (BTC) after the two firms heavily accumulated shares of MicroStrategy (MSTR) in Q1 this year. MicroStrategy is the largest institutional holder of Bitcoin, owning 140,000 BTC worth more than $4.22 billion. Data from CNN shows that Bank of America is now the fourth-largest […]
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After UBS acquired Credit Suisse and close to a dozen financial institutions injected $30 billion into First Republic Bank four days ago, S&P Global downgraded First Republic’s shares to junk status on Sunday. Investors are concerned that the cash infusion from 11 major financial institutions may not address the bank’s liquidity issues. First Republic’s shares […]