Banking Stress Returns
Regional banks in the U.S. are experiencing renewed stress despite reforms implemented after the 2023 crisis, with stocks of Zions Bank and Western Alliance suffering significant declines as Bitcoin hit a four-month low.
Strike’s CEO, Jack Mallers, views the current banking instability as a clear signal that Bitcoin (BTC) is anticipating a liquidity crisis. He suggests that a forthcoming response from the Federal Reserve will likely boost BTC prices.
“Bitcoin is accurately smelling trouble right now,” Mallers mentioned on Primal, referring to the latest events.
“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.”
Mallers further posted on X, stating, “Bitcoin is the most sensitive to liquidity. It moves first. It’s a truth machine.”
“Yields are plunging, spreads are widening, and banks are stressed. Bitcoin is working. It smells trouble. When they’re forced to print, it’ll move first again and outperform everything.”
Recap of the US Banking Crisis
The banking crisis that began in March 2023 was never fully resolved and merely masked through government bailouts and bank acquisitions. This situation has encouraged banks to engage in riskier behavior, underpinned by the knowledge of government assurances to backstop deposits beyond standard limits.
Recent reports indicate growing unease on Wall Street about the stability of regional banks, particularly following substantial write-offs of bad loans to commercial clients. The wellness of the banking sector remains questionable, sustained by implicit government support rather than robust financial management.
Bitcoin Dips to New Lows
Despite potential future benefits from this banking turmoil, Bitcoin itself has not shown signs of improvement, plummeting to $103,850 on Friday before slightly recovering to around $107,000 by Saturday morning.
“BTC on sale. If the current wobble in US regional banking escalates into a full-blown crisis, expect a relief akin to what we saw in 2023. Then, get ready to buy if you have the capital,” suggested Arthur Hayes, co-founder of BitMEX.
Related article: Bitcoin hits 15-week low under $105K amid bank woes echoing 2023.
