Bitcoin may rise as trillions of dollars will go to bailing out First Republic Bank

With US banking troubles continuing, BitMEX co-founder and crypto veteran Arthur Hayes predicts that Bitcoin will soon experience a rally. He expects the Federal Reserve to expand its contingency bank lending program, which could lead to more market liquidity and an increase in the price of Bitcoin.

Arthur Hayes Predicts Bitcoin Price Rise

Hayes predicts that the current uncertainty surrounding First Republic Bank (FRC) is likely to flood the market with more liquidity, which could push the price of risky assets like Bitcoin to all-time highs. In a tweet to his 376,200 followers on Twitter, he proclaimed, “Another Friday, another US bank on the brink of collapse from the FDIC.”

The Federal Deposit Insurance Corporation (FDIC) is considering a possible acquisition of First Republic Bank due to financial uncertainty. This could pave the way for an expansion of the emergency bank lending program launched by the Feds last month to bail out distressed banks. The Bank Term Funding Program offers one-year loans to alleviate liquidity pressures and help banks protect depositors. Based on the number of banks that can take advantage of this, it could lead to an injection of as much as $2 trillion in liquidity, according to JP MORGAN Chase & Co.

Hayes points out that the problem with FRC is that their balance sheet contains few treasuries and many other unwanted loans, such as commercial real estate loans, which are not eligible for the Bank Term Funding Program. Unless some “muppet bank” decides to bail out FRC, Hayes expects the Bank Term Funding Program to expand over the weekend to include other types of loans eligible to be exchanged against freshly printed US dollars.

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Impact of FDIC acquisition on the banking sector

If the FDIC decides to acquire First Republic Bank due to financial uncertainty, it could potentially be a tipping point for confidence in the banking sector. It would show that the government is ready to step in and save banks from imminent collapse. This could lead to more confidence in the banking sector and an increase in the stability of other banks.

On the other hand, this could also send a negative signal about the health of the US banking sector and lead to concerns about the stability of other banks. As a result, this may lead to a decrease in demand for bank shares and investors may lose confidence and invest their money elsewhere. This, in turn, could lead to a further fall in bank stock prices and a general decline in economic activity in the financial sector.

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