Arthur Hayes, BitMEX’s founder, recently explored factors shaping Bitcoin’s potential rally amidst challenges faced by New York Community Bancorp ($NYCB) and the broader banking sector. In a world where traditional finance meets cryptocurrencies, Hayes sheds light on potential impacts on Bitcoin’s value.
Dive into Hayes’ analysis and discover if 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 setback. The significant 46% drop in NYCB’s stock value occurred as its loan loss reserves surged tenfold beyond market expectations.
Expressing doubt about prior solutions, Hayes remarked, “Guess the banks aren’t fixed.” He pointed out a significant decline in 10-year and 2-year yields, suggesting the market anticipates a renewed bank bailout to address underlying issues.
Also Read: Bitcoin’s Outlook Amidst Fed Rate Cuts: Insights From JP Morgan & Ryze Labs
Bank Term Funding Program Concludes
Additionally, Hayes mentioned the upcoming end of the Federal Reserve’s Bank Term Funding Program (BTFP), introduced after the 2023 banking crisis to provide liquidity to banks by allowing them to use a broader range of collateral for borrowing.
“If my forecast is correct, the market will bankrupt a few banks within that period, forcing the Fed into cutting rates and announcing the resumption of the BTFP.”
In this scenario, he suggests a liquidity injection may bolster cryptocurrencies, particularly Bitcoin.
Bitcoin Price Analysis
While Hayes acknowledges a potential temporary dip in Bitcoin’s value amid banking concerns, he speculates that asset dumping by NYCB and other banks could trigger a new bailout. Drawing parallels to Bitcoin’s performance during the March 2023 banking crisis, he anticipates a similar pattern — a brief dip followed by a significant rally.
During the March crisis, Bitcoin’s value surged over 40%, attributed to its perceived role as digital gold or a safe-haven asset amid financial instability.
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