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Arthur Hayes, the founder of BitMEX, offered an in-depth analysis of the current financial landscape and its potential impact on Bitcoin, particularly in light of the recent challenges faced by the New York Community Bancorp (NYCB) and the banking industry as a whole .
Hayes' analysis draws on the complex interplay between macroeconomic policies, the health of the banking sector and the cryptocurrency market. His comments are particularly insightful given recent developments with NYCB. The bank's shares fell 46% on an unexpected loss and a substantial dividend cut, mainly attributed to a ten-fold increase in loan loss reserves, far exceeding estimates.
The incident raised a wake-up call about the stability and exposure of U.S. regional banks, particularly in the real estate sector, known to be cyclically sensitive and vulnerable to economic downturns. The stock market reacted negatively to these developments, with shares of US regional banks also falling due to NYCB's performance.
Upcoming Weekend Rally for Bitcoin?
Hayes explicitly declared, “Jaypow (Jerome Powell) and Bad Burl Yellen (Janet Yellen) will be printing money very soon. NYCB announces “surprise” loss due to loan loss reserves 10x higher than estimates. I guess the banks aren't fixed. This comment highlights the continued fragility of the banking sector, still reeling from the 2023 banking crisis. He added: “10- and 2-year yields have plunged, signaling that the market is expecting some kind of new recovery plan. bailout of the banks to remedy the rot. »
Additionally, Hayes highlighted the impending conclusion of the Federal Reserve's Bank Term Financing Program (BTFP), introduced in response to the 2023 banking crisis. The BTFP was a critical instrument for providing liquidity to banks, allowing them to 'use a wider range of collateral to borrow.
Hayes expects the market turmoil will lead the Fed to eventually reinstate the BTFP or introduce similar measures. In a recent statement, he noted: “If my predictions are correct, the market will bankrupt a few banks during this period, forcing the Fed to cut rates and announce the recovery of the BTFP. » This scenario, he argues, would create an injection of liquidity that could support cryptocurrencies like Bitcoin.
In his latest article on X, Hayes drew parallels to cryptocurrency's performance during the March 2023 banking crisis. He predicted a similar trajectory, suggesting a brief decline followed by a significant rally:
Expect BTC to fade a bit, but if NYCB and a few others dump over the weekend, expect another bailout very quickly. Then BTC hits the races, just like the March 23 price action. (…) I think it might be time to get back on the fam train. Perhaps after a few American banks bite the dust this weekend.
During the March crisis, the value of Bitcoin jumped more than 40%, a reaction attributed to its perceived role as digital gold or safe haven amid financial instability. Looking longer term and keeping in mind the Great Financial Crisis of 2008, he added: “What did the Fed and Treasury do the last time US housing prices plunged and put banks in danger? bankruptcy all over the world? Money Printer Come on Brrrr. BTC = $1 million. Yachtzee.
At press time, BTC was trading at $42,232.
Featured image created with DALL·E, chart from TradingView.com
Disclaimer: The article is provided for educational purposes only. It does not represent the views of NewsBTC on whether to buy, sell or hold investments and, naturally, investing involves risks. You are advised to carry out your own research before making any investment decision. Use the information provided on this website entirely at your own risk.
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