🐻 Bank goes 📉, Bitcoin goes 📈

GM friends. Welcome back to another issue of Web3 Seems Legit! We’ve been writing this newsletter for the past year now to keep you all informed on the latest web3 news in a quick and easy, 5 minute read. But some big changes are coming and we can’t wait to share it with you very soon 👀 . For now, let’s dig into this week’s hot topics.

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In this issue:

📣The big story of the week. The great bank consolidation is happening.

🗞️ In other news. Coinbases expands its international footprint with Coinbase International Exchange, $PEPE becomes the third-largest meme coin and Blur launches an NFT lending protocol, Blend.

📣The big story of the week

The great bank consolidation is happening

Right when we thought things might be settling down, we’re hit with another bank collapse, marking this as the fourth US bank failure of 2023, so far.

So what is First Republic Bank and how did we get here (again)? 

First Republic is a commercial bank catered towards high-net-worth individuals. In many ways, it was like what Silicon Valley Bank was startups, but for wealthy retail folks. First Republic would offer cheap loans to wealthy clients to attract big deposits, but what happens if they lent out more money than they had deposits?

Near the time of their collapse, it was reported that their loan-to-deposit ratio was 111%, meaning a risk of a bank run was imminent if customers decided to request for withdrawals and move their funds all at once.

With trouble brewing, 11 major banks decided to provide $30 billion of rescue funds to First Republic, but that proved to not be enough. Upon release of First Republic’s Q1 earning reports, it revealed that $104 billion in deposits was withdrawn, which was roughly 40% of their total deposits.

And just like how all the other banks collapsed, First Republic was on its way down as customers rushed to withdraw their funds. In one day, the stock price for $FRB fell over 50%. Today, it’s sitting at a -98% cut.

And it kept falling. After announcing its workforce layoffs, the FDIC was forced to intervene and seize immediate control of the failing bank. Shortly afterwards, it was announced that JPMorgan won the bid to pay the FDIC $10.6 billion for nearly all of First Republic’s assets.

And this folks, is what made the second-largest bank failure in US history.

What does this all mean for the future of the banking industry though and how will it impact the crypto market?

Well, for one, let’s look at this small bank massacre trend happening. As large, major banks get bailed out, customers are cluing into the fact that they may actually be the safest place to put their assets. Rather than keeping it in a small, regional bank, we’re going to continue to see more and more customers migrate their funds over to the big boys that get bailed out, aka the too big to fail banks.

In other words, it’s a bank consolidation. Just look at this sweet deal that JPMorgan got from acquiring First Republic.

Under regulatory laws, JPMorgan was technically not eligible to purchase First Republic because they already owned 10% of total US deposits. But all that went out the window, of course. Now JPMorgan not only controls more deposits but it's also expected to make a handsome profit from it. What a sweet deal.

As banks continue to consolidate and centralize, the need for Bitcoin is more obvious than ever. Not only that, but with the decline of the US dollar happening at full steam, I’m afraid that we’re headed into dangerous territories here.

The banking crisis and de-dollarization is going to continue to unravel and the best thing you can do is stay informed, stay prepared and stay vigilant. Who knows who will be next 🤷.

🗞️In other news

🚀 Coinbase launches Coinbase International Exchange. As the world’s largest exchange continues to fight against the SEC and seek regulatory clarity in the US market, it’s also not waiting around to expand internationally.

🐸 $Pepe becomes the third-largest meme coin. If you thought this frog coin was just a fad, you might be wrong. In just two weeks, this new meme coin has climbed the charts and now sits right behind the OGs Doge and Shiba with the largest market caps.

🖼️ Blur launches an NFT lending protocol, Blend. The popular NFT marketplace has now expanded to offer a ‘buy now, pay later’ approach to NFTs. This provides investors with more leverage, though some see NFT lending as a dangerous activity for overexposed traders.