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The fantastic thing about Bitcoin is that it doesn’t want a advertising staff: governments, central banks, banks and regulators have been giving Bitcoin free promotion in current months (and years), exhibiting why it wants a state-independent cash system. And the chapter of First Republic Bank and its state-sponsored takeover by JP Morgan reinforces the case for Bitcoin as soon as once more.
At least that’s the thesis of Arthur Hayes, co-founder of BitMEX, and he’s not alone. Via Twitter, Hayes wrote: “This JPM / FRC deal means the US regulators decided to nationalize the banking system.”
The Case For Bitcoin Grows
The analysts at The Kobeissi Letter have drawn consideration to the magnitude of the federal government subsidy for JP Morgan, which underneath present regulation mustn’t have taken over FRC in any respect. JP Morgan was already the biggest financial institution by deposits within the U.S. previous to the FRC deal, holding over 16%.
Percentage of Deposits Controlled by US Banks:
1. JP Morgan: 16.1%
2. Bank of America: 14.8%
3. Wells Fargo: 10.9%
4. Citibank: 5.8%
5. US Bank: 3.4%
6. Truist: 3.4%
7. PNC Bank: 3.3%
8. TD Bank: 2.9%
9. Charles Schwab: 2.7%
10. Capital One: 2.6%The prime 15 banks management 75% of…
— The Kobeissi Letter (@KobeissiLetter) April 30, 2023
Most shockingly, the banking large has introduced that the acquisition of First Republic will generate a one-time revenue of $2.6 billion. In addition, they count on to make a revenue of over $500 million per yr from the deal. All that is occurring whereas the FDIC is protecting $13 billion in losses and offering $50 billion in funding.
“You’re witnessing the product of a flawed system,” The Kobeissi Letter writes. Ultimately, the Fed is afraid that extra banks will fail. U.S. regulators need to make sure that First Republic’s acquisition goes easily to keep away from eroding belief within the banking system (and a confidence increase for Bitcoin).
The huge banks like JP Morgan fake that they saved the day. However, JP Morgan’s takeover of First Republic was fully for their very own profit. They will make $5.1 billion in earnings in 5 years. “Why would the big banks ever want the crisis to end?”, the analysts argue.
In that sense, Caitlin Long, founder and CEO of crypto-friendly Custodia Bank, can also be providing harsh criticism:
THE TOO-BIG-TO-FAIL BANKS get too-bigger-er-to-fail. JPM obtained govt indemnities to purchase FRC & its inventory worth is up within the pre-mkt. Yet once more, watch what the federal financial institution regulators truly do, not what they are saying. They actually actually love their TBTF banks, regardless of saying in any other case.
US Regulators “Nationalize” The US Banking System
And the U.S. banking disaster is much from over. The inventory costs of quite a few regional banks fell closely as soon as once more yesterday.
US Regional Bank Stocks Today:
1. Valley National, $VLY: -20%
2. Metropolitan Bank, $MCB: -18%
3. HomeStreet Bank, $HMST: -18%
4. HarborOne, $HONE: -11%
5. PacWest, $PACW: -10%
6. Citizens Financial, $CFG: -7%
7. Zions Bank, $ZION: -4%
8. KeyCorp, $KEY: -4%
9. M&T Bank, $MTB:…— The Kobeissi Letter (@KobeissiLetter) May 1, 2023
Arthur Hayes believes that extra banks will collapse. The huge beneficiaries shall be TBTF banks, which the BitMEX founder says are successfully nationalized as a result of they’ve a authorities lien on their whole deposit base.
“They will not be allowed to fail regardless of decisions they make. Socialized losses, privatized gains, it’s a great deal but…” writes Hayes, who claims that the eight TBFT banks must take in every other banks that may’t address the present market surroundings of too-fast elevated rates of interest.
According to the BitMEX founder, the federal government will make different exemptions, simply because the OCC lifted deposit focus limits and the FDIC loaned $50 billion to JP Morgan to push them into the takeover. But a deal will all the time be made, Hayes predicts.
If you aren’t one of many 8 TBTF banks you might be fucked so long as inflation is sticky at these excessive ranges and probably rising. […]
Due to the US debt ceiling debacle, no banks can get bailed out by the govt.. This is the proper level of political paralysis to capitalize on one other most likely a number of non-TBTF banks getting deaded by the FDIC.
At press time, the Bitcoin worth was at $27,998.
Featured picture from iStock, chart from TradingView.com
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