BitcoinBTC and crypto prices have rebounded from the price collapse of 2022 (with a “paradigm shift” for the US dollar that could shake the financial system).
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The price of Bitcoin has risen by about 80% over the past 12 months, with JP Morgan issuing a surprise Bitcoin price prediction this week.
Now, as Donald Trump quietly leans into bitcoin and cryptocurrencies, the market is bracing for the US Federal Reserve to end the financing lifeline for banks, with one closely watched trader warning that it could spark a “financial crisis” and force the Fed to restart. Its own money printer.
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“Stop BTFP [bank term funding program] It will cause a mini-financial crisis and force the Fed to stop “talking” and start “yelling” by cutting interest rates, shortening the QT interval. [quantitative tightening]and/or resuming money printing through quantitative easing (QE),” Arthur Hayes, founder of cryptocurrency derivatives pioneer Bitmex and now chief investment officer at a fund called Maelstrom, wrote in a blog post.
“Bitcoin price action tells me I'm right and they're wrong,” Hayes wrote, placing his short-term Bitcoin price forecast between $30,000 to $35,000 before it bounces back later in the year. “The Fed would rather just impress markets with speeches and Wall Street Journal opinion pieces because they are so afraid of inflation.”
The Fed this week confirmed rumors that in March it will end a $160 billion bank financing program, which was created with the approval of Treasury Secretary Janet Yellen amid last year's U.S. banking crisis that came close to a complete banking collapse.
The banking crisis is widely believed to have been triggered by the Fed's series of rapid interest rate hikes as inflation rose, adding pressure to banks' balance sheets that had become stretched during the ultra-loose monetary policies of the Covid era.
Hayes expects banks to continue to struggle “until interest rates are lowered”, adding “there is no way these banks can survive without government support provided via BTFP.”
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Meanwhile, bitcoin and cryptocurrency traders, gripped by exchange-traded fund (ETF) drama on Wall Street over the past few months, have begun to move away from tracking bitcoin ETF flows.
“Even if Bitcoin ETF flows disappoint, this is not the time to turn bearish as the macro environment will remain a tailwind in 2024, and the US election cycle will see a constructive fiscal response that will push asset prices higher,” he added. said Markus Thelen, Chairman of the Board of Directors. From research at 10X Research, he wrote in an email report.
“Below $38,000, the ETF hype may be fully priced out and Bitcoin returns to the macroeconomic and liquidity tone. The time to turn bearish was early January when we called for a correction back to $36,000/$38,000 when Bitcoin traded At $44,000 we will use any further pullback to start buying again.”
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