Bitcoin BTC price drops below $28k as JPMorgan takes control of embattled First Republic Bank

Bitcoin (BTC) kicked off the US trading week above $28,000 – continuing the downward spiral that began Sunday as federal regulators prepare to take control of First Republic Bank.

The largest cryptocurrency by market cap recently traded around $27,800, down more than 5% over the past 24 hours, according to CoinDesk data. BTC was hovering around $28,500 as US markets opened and banking giant JPMorgan was announced as the winner of the auction to buy First Republic assets.

Edward Moya, senior market analyst at Oanda’s foreign exchange division, suggested in a note that the rapid response to First Republic’s implosion showed that the banking sector was prepared for these types of crises. Moya wrote that Wall Street may have grown confident that broader banking risks had been “taken off the table”.

He added, “The US banking system seems to have a clue to deal with the next banking crisis as it arises, which is somewhat dampening the case for cryptocurrencies.”

San Francisco-based First Republic is the fourth bank to fail in the past two months, after Silvergate, Silicon Valley and Signature.

Ether (ETH), the second-largest cryptocurrency by market cap, followed a similar pattern to bitcoin, dropping more than 4% to trade at around $1,813 on Monday afternoon.

Stocks closed lower on Monday, with the S&P 500, the Wall Street benchmark, down 0.04%. Both the Dow Jones Industrial Average (DJIA) and the tech-heavy Nasdaq Composite recently fell 0.1%.

Investors will be waiting for the Federal Open Market Committee (FOMC) monetary policy meeting, which starts on Tuesday to decide whether and how much to raise interest rates. CME’s FedWatch tool currently puts the probability of a 25 basis point (bps) increase at more than 94%, which would boost the target range to between 5% and 5.25%.

Some analysts predicted that the decision could cause price volatility in the cryptocurrency market.

“After the breakout (BTC above $25,000), it is important to pay attention to pullbacks to gauge remaining buying strength,” Bitcoin mining equipment and hosting provider Blockware Solutions Analyst wrote in a newsletter Friday. In this case, BTC is flashing some bullish signs as buyers quickly stepped in at the 50-day high [simple moving average]. “

Blockware Solutions analysts said BTC has strong resistance between $30,000 and $31,000, though they note that “it is not unreasonable to assume that the FOMC policy decision could make or break Bitcoin’s current strength.”

After rallying in March, bitcoin rose a more modest 2.5% in April amid regulatory, banking and macroeconomic uncertainty for cryptocurrencies, according to the CoinDesk Market Index (CMI), which measures the overall performance of the crypto market. Ether rose 4.4%, with most of its gains coming when Ethereum Shanghai’s successful upgrade didn’t lead to an ETH mass sell-off, as some market watchers expected.

Blockchain-based distributed rendering service RNDR utility token was the top performing asset on CMI, up 77%, followed by decentralized finance (DeFi) platform INJ token, which jumped 69%.

Chain’s XCN token in the CMI cryptocurrency sector was among CMI’s biggest laggards, dropping more than 33% in April. It fell more than 53% in March.

But regulation remains a major stumbling block for the industry. In the United States, exchange giant Coinbase (COIN) has asked a federal court to force the Securities and Exchange Commission (SEC) to clarify whether existing securities laws apply to digital assets, and the European Union has completed legislation aimed at clarifying a regulatory approach to the sector. A number of analysts believe that the next steps of the industry around the world may affect prices in the coming months.

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