Several regional banks in the U.S. are once again facing financial difficulties, even after reforms from the 2023 banking crisis. Stock prices for Zions Bank and Western Alliance have plummeted while Bitcoin has dipped to a four-month low.
Strike’s CEO, Jack Mallers, believes that this banking stress confirms Bitcoin’s role in forecasting an upcoming liquidity crisis, and predicts that the Federal Reserve’s response could lead to an increase in BTC prices.
“Bitcoin is accurately smelling trouble right now,” Jack Mallers stated on the Primal social media platform.
Translation: “Bitcoin can sense imminent issues in the economy.”
He elaborated on Twitter, emphasizing Bitcoin’s sensitivity to liquidity changes and its ability to respond ahead of other assets:
“Yields are going down, spreads are widening, and banks are under pressure. Bitcoin is functioning as expected. It senses trouble. When forced to print money, it will react first and outperform all other assets.”
Translation: “When liquidity becomes a problem, Bitcoin will lead the charge, showing better performance than anything else.”
The Continuation of the Banking Issue
The March 2023 crisis involving regional banks was never realmente resolved; it merely received temporary relief through government bailouts. This created a moral hazard where banks made reckless decisions, relying on government support that exceeds typical insurance limits.
As Wall Street grows increasingly worried about the health of regional banks — particularly following recent loan write-offs — the implications of these events are echoing fears stemming from last year’s crisis.
Bitcoin’s Recent Drop
Consequently, Bitcoin fell to $103,850, down over $5,000 within a few hours. As of Saturday morning, it has recovered slightly to $107,000 but has lost more than 15% of its value compared to its all-time high.
“BTC is currently at a discount. If these regional bank instability escalates into a full crisis, brace for a rescue similar to 2023. Anyone with spare capital should get ready to invest,” said Arthur Hayes, co-founder of BitMEX.
Translation: “If this banking situation worsens, history might repeat itself with government bailouts, and now might be a good time to buy bits of Bitcoin.”
