Markets are starting to price in a policy change from the Fed as turmoil in the banking sector forces the central bank to protect its financial system. Comments from CryptoQuant analyst Cristian Palusi suggest that the liquidity crisis currently plaguing a range of commercial banks could be a “long-awaited buy signal” for Bitcoin.
Banks fall, Bitcoin rises
in a postal On Thursday, Palusci noted that the federal funds base policy rate has significantly shortened the time horizon in which it thinks the central bank will cut rates for the first time, from the first quarter of 2024 to June 2023.
Meanwhile, gold and bitcoin are on the rise: The precious metal rose to nearly $2,000 on Friday, while BTC touched a nine-month high of $27,787.
Palusi wrote:
“Shortly after the SVB bankruptcy and related bailout came a factor that represented a clear buy signal: Coinbase arbitrage.”
Coinbase (COIN) is up over 37% in the past 5 days and is known to be strongly correlated with the cryptocurrency markets they facilitate transactions.
“Originally, after USDC lost its peg, there could be multiple explanations for the spread. The spread is not due to recent price action as US investors see the $20,000 area as a very interesting level, but rather indicates that there is a lot of buying on the floor pressure.”
Will the Fed change policy?
Silicon Valley Bank (SVB) holds Circle’s $3.3 billion in USDC reserves, with Coinbase largely involved. When the bank was shut down by regulators on March 10, USDC briefly lost its peg and fell along with COIN and Bitcoin.
Now, after the Fed promised to bail out savers in SVB and Signature, all three have recovered spectacularly. The central bank also launched a special lending program for federally insured depository institutions, which banks use to borrow $300 billion in a week.
On Thursday, BitMEX co-founder Arthur Hayes called the plan an “all-weather” form of quantitative easing that would ultimately drive up bitcoin’s price — a sentiment Palusci agreed:
Investment bank JPMorgan said:
“The Fed’s Term Funding Program (BTFP) will inject $2 trillion into the financial system. Using a similar acronym, buying the dip seems pretty obvious.”
Leverage in the crypto sector also appears to be down compared to October 2022, which could be “one of the other factors driving upward momentum as the central bank formalizes its decision on policy changes.”
Former BitMEX CEO Arthur Hayes Boldly Predicts Bitcoin Price to Hit $1 Million
Former BitMEX CEO Arthur Hayes has reiterated his $1 million prediction for bitcoin, noting that China’s recent cut to the reserve requirement ratio (RRR) will increase the cryptocurrency’s value a factor.
source: Arthur Hayes
In a tweet, Hayes posted a screenshot outlining China’s plan to cut the reserve requirement ratio for all banks by 0.25 percentage points. The move is to maintain rapid loan growth and ensure liquidity in the banking system.
As previously predicted by Hayes, Bitcoin will hit $1 million by 2030 due to a “HODL culture,” in which consumers staunchly refuse to sell their holdings in anticipation of a significant price increase.
The upbeat forecast comes as the euro and dollar are nearing parity for the first time in 20 years.
Former BitMEX CEO Arthur Hayes Doubles Down on His Prediction #bitcoin The price will reach $1 million #bitcoin $bitcoin @cryptohayes https://t.co/NLkRsncCuH
— Kyptos (@azcoinnews) March 17, 2023
China’s cut to the reserve requirement ratio is seen as a measure to encourage lending and boost the economic recovery after epidemic curbs and a slump in the property market. Economists said the rate cut decision would support the pace of quick lending in January-February and maintain liquidity in the banking sector.
The current banking crisis is destabilizing and volatile the world’s financial markets, while also giving cryptocurrencies a sudden revival.
The price of Bitcoin soared to $26,000 yesterday after Silicon Valley Bank filed for bankruptcy. Other cryptocurrencies such as ETH and DOGE also performed significantly better, as investors worried about the lack of banking presence for crypto companies in the United States.
In his latest forecast, Hayes reiterated his previous assertion that a new cryptocurrency bull market is underway.
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according to Kyptos
