Numerous regional banks in the United States are encountering renewed stress, even after bolstering their finances post the 2023 banking crisis, and Bitcoin may gain from any ensuing liquidity crisis.
Strike CEO Jack Mallers views the banking strain as confirmation that Bitcoin (BTC) is correctly anticipating an upcoming liquidity crisis, asserting that the Federal Reserve’s inevitable actions will push BTC prices upward.
“Bitcoin is intuitively sensing trouble right now,” he stated on the Primal social media platform on Friday.
“The US is going to have to inject some of that sweet, sweet liquidity soon and print a ton of money or else their fiat empire goes kaboom.”
Turning the discussion to X, he mentioned, “Bitcoin is the most sensitive to liquidity. It moves first. It’s a truth machine.”
“Yields are plummeting, spreads expanding, and banks are stressed. Bitcoin is functioning. It senses trouble. When they’re compelled to print, it’ll respond first and outperform all.”
US banking crisis redux
The regional bank crisis of March 2023 was never fully resolved — merely masked by government bailouts and acquisitions.
This created a moral hazard, as banks engaged in excessive risk-taking, trusting the government would backstop deposits beyond the Federal Deposit Insurance Corporation (FDIC) limits.
Wall Street is increasingly concerned about the health of the nation’s regional banks, following the write-off of bad loans to commercial clients, as reported by the Associated Press on Friday.
Related: Bitcoin drops to 15-week low under $105K as US regional bank struggles resonate from 2023
Zions Bank and Western Alliance stocks plummeted this week due to loan issues, inciting broader market concerns as confidence in regional banks was never fully restored after 2023.
The US banking system remains susceptible, supported by implicit government assurances rather than solid financial practices, noted the Kobeissi Letter.
Bitcoin plummets to four-month low
While any potential advantages for Bitcoin from this banking crisis are not yet visible.
The asset fell to a four-month low of $103,850 on Friday, losing over $5,000 within hours.
It has since bounced back to trade at $107,000 on Saturday morning in Asia, yet is still down more than 15% from its all-time peak.
“BTC is on sale. If this US regional banking instability escalates into a crisis, be prepared for a 2023-like bailout. And then go shopping, assuming you have spare capital,” advised BitMEX co-founder Arthur Hayes.
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