U.S. Banking System Fragile: Third Bank Collapse Amid Bitcoin Price Drop

• President Biden has admitted that the United States banking system is fragile and has promised to institute measures to ensure its financial system remains “sound and safe.”
• The collapse of the First Republic Bank, the third major bank to fail in less than two months, saw its stock crash as Bitcoin prices powered higher.
• The government will protect depositors, including small businesses that need to process payroll for workers.

US Banking System Fragile

U.S. President Joe Biden recently spoke at National Small Business Week on May 1 where he acknowledged that the U.S. banking system is fragile. He promised to take steps to ensure it remain “sound and safe”.

Bitcoin Prices Drop

Despite Biden’s comments, Bitcoin and most cryptocurrencies remain lower with Bitcoin down 4% in the last 24 hours and roughly 10% from April 2023 highs, trading at $28,100.

First Republic Bank Collapse

The collapse of First Republic Bank was the third major bank to fail in less than two months resulting in a stock crash as Bitcoin prices continued to rise. The bank lost over $72 billion as customers transferred their funds elsewhere during Q1 2023 while Silicon Valley (SVB) Bank also experienced a deluge of withdrawal requests causing services to be temporarily halted during mid-March 2023.

Government Intervention

In order to stabilize the sector and keep depositors safe, including small businesses processing payrolls for employees, President Biden announced that the government will intervene by providing protection for all depositors affected by these collapses. In particular, First Republic Bank received a $30 billion capital injection from 11 lenders before its assets were taken over by FDIC and sold off JPMorgan Chase for $10.6 billion dollars later on.


President Biden’s assurance that all finances will be protected provides reassurance during this turbulent period for banks across America as more institutions face liquidity issues due to unsettled markets brought about by recent events such as the pandemic .