Many 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 banking stress as proof that Bitcoin (BTC) is rightly pricing in an impending liquidity crisis, positing that the inevitable response of the Federal Reserve will drive BTC prices higher.
“Bitcoin is precisely the annoying problem right now,” he said on the primal social media platform on Friday.
“The US needs to inject some sweet, sweet liquidity soon and print a ton of money or else their fiat empire is going to go kaboom.”
Talking to X, he said“Bitcoin is the most sensitive to liquidity. It moves first. It’s a truth machine.”
“Yields are puking, spreads are exploding, and banks are stressed. Bitcoin works. It smells trouble. When they’re forced to print, it’s going to move first, and it’s going to go all over the place.”
US Banking Crisis Redux
March 2023 Regional Bank Crisis is not really solved – only on paper with government bailouts and takeovers.
However, it created a moral hazard, as Banks It took excessive risks knowing that the government would backstop deposits beyond Federal Deposit Insurance Corporation (FDIC) limits.
Wall Street is growing concerned about the health of the nation’s regional banks, following bad loan write-offs to commercial customers, such as reported via the Associated Press on Friday.
Related: Bitcoin Hits 15-Week Low Under $105k As US Regional Bank Woes Echo 2023
The stocks of Zions Bank and Western Alliance crashed this week due to loan problems, fueling broader market fears that confidence in the region’s banks has not been fully restored after 2023.
The US banking system remains vulnerable, bolstered by government guarantees rather than sound financial practice, explained The Kobeissi letter.
Bitcoin tanks to 4-month low
Whatever benefits may accrue to Bitcoin from this banking crisis, they are not yet apparent.
The asset tanked at a four-month low of $103,850 on Friday, shedding more than $5,000 in a matter of hours.
It has since recovered to trade at $107,000 on Saturday morning in Asia, but remains more than 15% from its all-time high.
“BTC on sale. If this US Regional Banking Wobble escalates into a crisis, be prepared for a 2023 bailout-like. And then shop, assuming you have spare capital,” said Bitmex co-founder Arthur Hayes.
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