Arthur Hayes, the 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 faced by New York Community Bancorp (NYCB) and the broader banking sector.
Hayes’s analysis draws on the complex interplay between macroeconomic policies, banking sector health, and the cryptocurrency market. His comments are particularly insightful given the recent developments with NYCB. The bank’s stock plummeted by 46% due to an unexpected loss and a substantial dividend cut, which was primarily 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 downturns. The stock market reacted negatively to these developments, with regional US bank stocks also declining due to NYCB’s performance.
Weekend Rally Ahead For Bitcoin?
Hayes explicitly stated, “Jaypow [Jerome Powell] and Bad Burl Yellen [Janet Yellen] will be printing money very soon. NYCB annc a ‘surprise’ loss driven by loan loss reserves rising 10x vs. estimates. Guess the banks ain’t fixed.” This comment underscores the persisting fragility of the banking sector, still reeling from the shocks of the 2023 banking crisis. He added, “10-yr and 2-yr yields plunged, signaling the market expects some sort of renewed bankster bailout to fix the rot.”
Furthermore, Hayes highlighted the impending conclusion of the Federal Reserve’s Bank Term Funding Program (BTFP), which was introduced in response to the 2023 banking crisis. The BTFP was a critical instrument in providing liquidity to banks, allowing them to use a wider range of collateral for borrowing.
Hayes anticipates market turbulence leading 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 a few banks within that period, forcing the Fed into cutting rates and announcing the resumption of the BTFP.” This scenario, he argues, would create a liquidity injection that could buoy cryptocurrencies like Bitcoin.
In his latest post on X, Hayes drew parallels to the cryptocurrency’s performance during the March 2023 banking crisis. He predicts a similar trajectory, suggesting a brief dip followed by a significant rally:
Expect BTC to swoon a bit, but if NYCB and a few others dump into the weekend, expect a new bailout right quick. Then BTC off to the races just like March ’23 price action. […] I think it might be time to get back on the train fam. Maybe after a few US banks bite the dust this weekend.
During the March crisis, Bitcoin’s value jumped over 40%, a reaction attributed to its perceived role as a digital gold or a safe-haven asset amid financial instability. On a longer time horizon and with the Great Financial Crisis from 2008 in mind, he further argued, “What did the Fed and Treasury do last time US property prices plunged and bankrupted banks globally? Money Printer Go Brrrr. BTC = $1 million. Yachtzee.”
At press time, BTC traded at $42,232.
Featured image created with DALL·E, chart from TradingView.com
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