Bitcoin pulls back to start May as First Republic Bank saga comes to an end
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Cryptocurrencies took a dip on Monday to start the week and new month as investors bet the takeover of First Republic Bank could put an end to the financial crisis, which has been the biggest driver of this year's bitcoin rally.
Bitcoin fell about 4.2% to 28,137.76 to start the week and new month, according to Coin Metrics. Ether lost 4% to 1,828.81.
On Monday regulators took possession of First Republic, making it the third U.S. bank failure this year and the biggest one since the 2008 financial crisis. JPMorgan Chase will acquire most of its deposits and assets.
Last week, the price of bitcoin rallied in the final week of April as troubles at the bank unfolded. Trading of the cryptocurrency has been choppy, however, as investors straddle the effects of the banking crisis on crypto with high inflation, Federal Reserve policy, a potential recession and an increasingly bearish narrative building around the U.S. dollar.
«It's unclear whether the banking crisis narrative can continue to be a boon for bitcoin,» said Alex Thorn, head of firmwide research at Galaxy. «Overall, the market lacks clear positive near-term catalysts, with supply issues overhanging bitcoin … That being said, bitcoin accumulation by small addresses is outpacing issuance, and we expect Ethereum staking to increase, each of which provides a supportive supply narrative.»
«Outside of crypto-native factors, we expect a back-of-the-year macro environment to be characterized by tightening, recession, and an expanding multipolarity in the global economy, all of which can be supportive of gold and bitcoin,» he added.
Investors have been expecting a slowdown from bitcoin's first-quarter rally, although cryptocurrency remains on its upward trend
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