Several regional banks in the United States are facing renewed stress despite strengthening their finances after the 2023 banking crisis, and Bitcoin could benefit from any liquidity crisis that follows.
Strike CEO Jack Mallers sees the banking stress as validation that Bitcoin (BTC) is correctly pricing in an impending liquidity crisis, opining that the Federal Reserve’s inevitable response will drive BTC prices higher.
“Bitcoin is accurately smelling trouble right now,” he said 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.”
Taking the conversation over to X, he said, “Bitcoin is the most sensitive to liquidity. It moves first. It’s a truth machine.”
“Yields are puking, spreads blowing out, and banks are stressed. Bitcoin is working. It smells trouble. When they’re forced to print, it’ll move first again, and outperform everything.”
US banking crisis redux
The March 2023 regional bank crisis was never truly resolved — just papered over with government bailouts and acquisitions.
However, this created a moral hazard, as banks took excessive risks knowing the government would backstop deposits beyond the Federal Deposit Insurance Corporation (FDIC) limits.
Wall Street is growing concerned about the health of the nation’s regional banks, following the write-off of bad loans to commercial customers, as reported by the Associated Press on Friday.
Related: Bitcoin hits 15-week low under $105K as US regional bank woes echo 2023
Zions Bank and Western Alliance stocks crashed this week due to loan problems, triggering broader market fears because confidence in regional banks had never been fully restored after 2023.
The US banking system remains vulnerable, propped up by implicit government guarantees rather than sound financial practices, explained the Kobeissi Letter.
Bitcoin tanks to 4 month low
Whatever benefits may accrue to Bitcoin from this banking crisis, they’re not yet apparent.
The asset tanked to a four-month low of $103,850 on Friday, shedding over $5,000 in a matter of hours.
It has since recovered to trade at $107,000 on Saturday morning in Asia, but remains down more than 15% from its all-time high.
“BTC on sale. If this US regional banking wobble grows to a crisis, be ready for a 2023-like bailout. And then go shopping, assuming you have spare capital,” said BitMEX co-founder Arthur Hayes.
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