- As bank stocks lost ground on the FOMC interest rate decision day, the Federal Reserve held the fund rate steady at a 23-year high of 5.25%-5.5%.
- The KBW Regional Banking Index experienced a 6% drop, marking the largest single-day decline since the banking conditions crisis in several banks.
- Hayes states that BTFP and window dressing will not help, saying, ‘CRE and multifamily housing loans are not eligible collateral.’
While the Fed continues to keep interest rates steady, Arthur Hayes highlighted important points by revealing his expectations for the Bitcoin price.
Fed Remains Steadfast on Interest Rates
As bank stocks lost ground on the FOMC interest rate decision day, the Federal Reserve held the fund rate steady at a 23-year high of 5.25%-5.5%. Despite dismissing the possibility of any interest rate hike, Chairman Jerome Powell stated that the central bank is not ready to cut rates in March.
Shares of New York Community Bancorp (NYCB) fell by 38%, dropping to $6.47 after cutting its dividend and reporting a loss, reigniting fears of a banking crisis. CEO Thomas Cangemi stated that New York Community Bank has adapted to the requirements of being a large bank after taking over assets and liabilities from Signature Bank.
The KBW Regional Banking Index decreased by 6%, reaching $101.99, marking the largest single-day decline since the banking conditions crisis in several banks. Due to the absence of Fed interest rate cut plans and the Bank Term Funding Program’s (BTFP) expiration in March, the U.S. banking sector could return to a bank condition. Small banks are still struggling.
Arthur Hayes Says Money Printing Is Back
Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen will soon announce that money will be printed. The surprise loss from New York Community Bancorp’s credit loss reserves increased tenfold compared to expectations.
Additionally, after the FOMC, 10-year and 2-year U.S. Treasury yields fell, indicating that the market expects some bank rescue funds to correct bank losses. The U.S. 10-year Treasury yield dropped below 4%, reaching 3.946% on Thursday. Arthur Hayes, co-founder of BitMEX, says that BTFP and window dressing will not help, stating, ‘CRE and multifamily housing loans are not eligible collateral.’
He expects Bitcoin to be volatile, but if the share prices of NYCB and other banks continue to decline, a new rescue package may come soon. The Bitcoin price is expected to rally similarly to the March 2023 price movement. The likelihood of interest rate cuts in the June FOMC meetings is higher as the Fed and Treasury Department adjust to the U.S. economy’s resilience shown in PCE inflation, employment, and retail sales data.
BlackRock and other banks predict that the Fed will cut interest rates in June. Arthur Hayes states that Bitcoin’s long-term price will continue to be $1 million during the banking crisis and the Bitcoin halving period.
BTC price has dropped 1% in the last 24 hours, currently trading at $42,170. The 24-hour low and high are $41,879 and $43,717, respectively. Additionally, the trade volume has increased by 15% in the last 24 hours, indicating an increased interest among traders.
