The resulting correction led ether to $1,810 on May 1, approaching its lowest level in a month

The price of ether has shown weakness after failing to break the $1,950 resistance on April 26. The resulting correction led ether to $1,810 on May 1, approaching its lowest level in a month. Strangely, the movement took place while U.S. authorities seized First Republic Bank (FRB).

The Federal Deposit Insurance Corporation (FDIC) entered into a purchase and assumption agreement with financial giant JPMorgan to safeguard depositors of First Republic Bank, estimating a loss of $13bln.

Commenting on the latest big U.S. bank crisis, UBS expert Erika Najarian said: This deal does not change the rates, recession and regulatory headwinds that regional banks are facing.

Strangely, the VIX indicator, which measures how traders are pricing the risks of extreme price oscillations for the S&P 500 index, hit its lowest level in 18 months at 15.6 per cent on May 1.

It should be noted that overconfidence is the key reason for surprise moves and big liquidations in derivatives markets, meaning low volatility does not necessarily come before times of price stability.

The economic conditions have aggravated considerably after the U.S. reported Q1 GDP growth of 1.1 per cent, lower than the 2 per cent market consensus. In the meantime, Germany’s inflation continued to be extraordinarily high at 7.6 per cent YOY during April. Investors are now pricing higher odds of a global recession as the U.S. Fed is anticipated to hike interest rates above 5 per cent on May 3.

As per macro analyst Lyn Alden, the U.S. Treasury is now targeting $1.4trln in new net borrowing between April and September this year as tax receipts have been running below expectations.

In case the U.S. debt level continues to rise while interest rates stay high, the government will be compelled to raise debt payments, further pressuring its delicate fiscal situation.