Bitcoin nearly reached $30,000 at one point, with concerns in the market sparked by the First Republic Bank crisis and debt ceiling.

Yesterday, the market experienced a sharp decline, with Bitcoin briefly approaching the $30,000 mark before plummeting to $27,434, and then climbing back to $29,255 at the time of writing. Banking crises and debt ceilings continue to unsettle the market.

First Republic Bank's Deposits Decline, Stock Hits New Low

First Republic Bank reported on Monday that total deposits fell by 41% in the first quarter to $104.5 billion. This includes a $30 billion infusion from 11 of the largest U.S. banks. Following a 49% plunge in stock price on Tuesday, the bank's shares dropped nearly 30% again on Wednesday, hitting a historic low of $5.69.

On March 16, 11 banks including Bank of America, Citibank, Wells Fargo, and JPMorgan Chase collectively deposited $30 billion into First Republic Bank to mitigate its deposit outflows, demonstrating interbank cooperation to maintain confidence in the financial system. These deposits are expected to be held at First Republic Bank for at least 120 days. However, this move has not boosted confidence as intended. First Republic Bank announced plans to cut 20-25% of its workforce this quarter and is taking action to strengthen its business and restructure its balance sheet. According to Bloomberg, the bank is looking to sell up to $100 billion in loans and securities.

For more information about First Republic Bank, please see: First Republic Bank Stock Still Struggling, U.S. Considers Providing More Support to First Republic Bank

Yellen Warns Debt Default Could Trigger Economic Catastrophe

According to Reuters, U.S. Treasury Secretary Yellen warned in a speech on Tuesday that failing to raise the debt ceiling through a congressional vote could lead to a government default and trigger an economic catastrophe. Yellen stated:

Default would raise the cost of borrowing sustainably, making future investments more expensive. U.S. businesses would face a deteriorating credit market, and the government might not be able to make payments to military families and retirees who rely on social security.

The U.S. House of Representatives ultimately passed a bill to raise the government's debt ceiling by a narrow margin, easing market concerns.

For an explanation of what the debt ceiling is, please see: Debt Ceiling Deadlock Unresolved, U.S. Treasury "Default Insurance" Surges to Highest Levels in Over a Decade, Will Default Happen?

PCE to Be Released Soon, Market Expects Rate Hike Next Week

This week's upcoming release of the Personal Consumption Expenditures (PCE) price index, one of the Federal Reserve's key inflation indicators, may influence further policy actions at the Fed's meeting on May 3. According to CME's FedWatch data, the majority of investors expect the Fed to raise rates by another 25 basis points.

For more discussions on rate hikes, please see: Another 1-Point Rate Hike Next Month? The Dual Dilemma Facing the Federal Reserve, How Officials View It?