Major financial institutions such as JPMorgan Chase and Citigroup are facing a surge in customer requests to transfer funds from smaller lenders as people seek more stability amid economic uncertainty caused by the ongoing bank run on Silicon Valley Bank.
First Republic Bank Feels the Heat
This comes shortly after a massive bank run took place on Monday March 13, 2023. Many bank stocks plummeted by double digit percentage losses. Trading of several bank stocks, including $CMA, $MCB, $FRC, $WAL, $PACW, $EWBC, $CUBI and $KEY was halted at the New York Stock Exchange (NYSE).
The most affected Stock was $FRC of the First Republic Bank, which is down 74%
Shortly after the fall, Biden addressed the nation in a press briefing in which he reassured the public and Silicon Valley Bank depositors that they will access their money as soon as March 13, 2023.
Biden also assured taxpayers that they will not bear the losses incurred by the affected banks. It is worth noting that American banks are in over $600 billion in unrealized losses. The FDIC, now with the backing of the Federal Reserve and US Treasury will make sure that no depositor is affected the collapse of any bank.
This means that the $250,000 FDIC insurance requirement does not apply. In the wake of this announcement, USDC began to regain its peg since it has $3.3 billion banked at Silicon Valley Bank.
President Biden also reiterated that investors would not be protected. He said that investing is a personal decision and losses are part of any investment journey. This statement led to the subsequent decline of many bank stocks as investors rushed to dump the stocks.
Subsequently the price of Bitcoin rose 17% in less than 6 hours.
As of the time of writing. BTC is trading at $24,431, a 22% rise in three days.
Vincent Munene is a freelance writer and a great blockchain enthusiast. Blockchain has changed his life in terms of financial freedom and in return, he likes to educate people and keep them up to date on everything blockchain. He is a Biochemist by profession and also loves to play the piano.