Arthur Hayes, founder of BitMEX, recently examined the factors shaping a potential rally in Bitcoin amid the challenges facing New York Community Bancorp ($NYCB) and the broader banking sector. In a world where traditional finance meets cryptocurrency, Hayes highlights the potential impact on Bitcoin’s value.
Take a look at Hayes’ analysis to find out whether this is a golden buying opportunity or a recipe for disaster.
Powell and Yellen’s response
In a recent tweet, Hayes predicted a potential move by Federal Reserve leaders Jerome Powell and Janet Yellen to print more money in response to NYCB’s unexpected financial difficulties. NYCB’s stock plunged 46% in value as its loan loss reserves jumped 10 times more than market expectations.
“I don’t think the banks are set in stone,” Hayes said, expressing doubts about the previous solution. He noted that 10-year and 2-year yields have fallen significantly, suggesting the market is expecting a renewed bank bailout to fix underlying problems.
Also Read: Bitcoin Outlook Amid Fed Rate Cuts: Insights from JP Morgan and Ryze Labs
End of Bank Term Funding Program
Hayes also noted that the Federal Reserve’s Bank Term Funding Program (BTFP), which was introduced to provide liquidity to banks after the 2023 banking crisis by allowing them to use a wider range of collateral for lending, will soon end.
““If my prediction is correct, the market will likely drive a few banks out of business within that period, causing the Fed to cut interest rates and announce the reopening of BTFP.”
In this scenario, he suggests that liquidity injections could strengthen cryptocurrencies, particularly Bitcoin.
Bitcoin Price Analysis
While Hayes acknowledges that banking concerns could cause a temporary decline in the value of Bitcoin, he speculates that a selloff in assets from NYCB and other banks could trigger new bailouts. He predicts a similar pattern, similar to Bitcoin’s performance during the banking crisis in March 2023: a brief decline followed by a significant rally.
During the March crisis, Bitcoin’s value soared more than 40% as it was viewed as digital gold or a safe-haven asset amid financial instability.
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