Arthur Hayes, founder of BitMEX, has offered an in-depth analysis of the current financial landscape and its potential impact on bitcoin, especially in light of the recent challenges facing New York Community Bancorp (NYCB) and the banking sector in general.
Hayes' analysis is based on the complex interplay between macroeconomic policies, the health of the banking sector, and the cryptocurrency market. His comments are particularly revealing given the bitcoin-record-high-new-york-community-bancorp/” target=”_blank” rel=”nofollow”>recent developments with NYCB. The bank's shares plunged 46% due to an unexpected loss and a substantial dividend cut, which was mainly attributed to a tenfold increase in loan loss reserves, far exceeding estimates.
This incident raised red flags about the stability and exposure of US regional banks, particularly in the real estate sector, which is known to be cyclically sensitive and vulnerable to economic shocks. The stock market reacted negatively to these developments and shares of US regional banks also fell due to NYCB's performance.
Is a weekend rally coming for bitcoin?
Hayes explicitly fixed, “Jaypow (Jerome Powell) and Bad Burl Yellen (Janet Yellen) will be printing money very soon. NYCB Announces 'Surprise' Loss Driven by Increase in Credit Loss Reserves 10x Larger Than Estimates. I guess the banks are not fixed.” This comment underscores the continued fragility of the banking sector, which is still recovering from the impacts of the 2023 banking crisis. He added: “10- and 2-year bond yields have plummeted, indicating that the market expects some form of of renewed bank bailout to fix the situation.
Additionally, Hayes highlighted the imminent conclusion of the Federal Reserve's Bank Term Financing Program (BTFP), which was introduced in response to the banking crisis of 2023. The BTFP was a critical instrument in providing liquidity to banks, allowing them to use a wider range of collateral to borrow.
Hayes anticipates that market turmoil will lead to the Fed possibly reinstating the BTFP or introducing similar measures. In a recent statement, he noted: “If my forecast is correct, the market will bankrupt some banks within that period, forcing the Federal Reserve to cut rates and announce the resumption of the BTFP.” This scenario, he maintains, would create an injection of liquidity that could boost cryptocurrencies like bitcoin.
In his latest post on X, Hayes drew parallels to the cryptocurrency's performance during the March 2023 banking crisis. He predict a similar trajectory, suggesting a brief decline followed by a significant rebound:
Expect btc to faint a bit, but if NYCB and a few others hit the weekend, expect a new bailout quickly. Then, btc is off to the races just like the March 23 price action. (…) I think it might be time to return to the train family. Maybe after some US banks bite the dust this weekend.
During the March crisis, bitcoin's value jumped more than 40%, a reaction attributed to its perceived role as a digital gold or safe haven asset amid financial instability. Taking a longer time horizon and with the Great Financial Crisis of 2008 in mind, he further argued: “What did the Federal Reserve and Treasury do the last time American real estate prices crashed and bankrupted banks globally? world? Go Brrrr Money Printer. btc = 1 million dollars. Yatezee.
At the time of publication, btc was trading at $42,232.
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