- BitMEX ex-CEO Arthur Hayes backs former Coinbase CTO’s $1 million Bitcoin bet.
- Hayes notes that Fed’s bailout actions are key in pushing BTC higher.
- While some are predicting a $100,000 BTC, others are discussing hyper-bitcoinization on Crypto Twitter.
Bitcoin has taken front and center stage after it restarted its 2023 rally in March. This resurgence of buying pressure pushed BTC to nine-month highs. While this move may sound interesting, the most important development is the reason behind this rally, which has got the likes of Balaji Srinivasan, ex-Coinbase CTO, Arthur Hayes, BitMEX co-founder and other well-known personalities talking about the pioneer crypto.
Also read: Week Ahead: Crypto markets reel from the banking crisis as investors prepare for US CPI
Why are investors flipping massive bullish on Bitcoin? Why now?
Bitcoin price has spent much of the last eight months consolidating inside a tight range. This massive rangebound movement ended as BTC pushed through the $25,000 hurdle in mid-March. The reason for this sudden spike in bullish momentum or buying pressure can be attributed to the Banking Crisis.
In hindsight, the collapse of the Silicon Valley Bank (SVB) seems to be the first domino to fall. After which, Signature Bank and Credit Suisse followed suit. As the New York trading session began, the First Republic’s (FRC) stock plummeted more than 50% before circuit breakers were put in place.
Amid this crisis, the United States Federal Reserve promised that the investors of the affected banks would be made whole. However, this move did not stop investors from panicking and triggering other banks to collapse. As a result, midsized US-banks came together and wrote a letter to the Fed requesting a backstop, aka liquidity, for two years.
Additionally, the Fed announced that it is collaborating with other Central Banks to provide liquidity to prevent this contagion from spreading to other parts of the world.
Fed’s money printer goes brrr
Arthur Hayes, ex-CEO of BitMEX, explains that this move from the Fed is to prevent an en masse sell-off of US bonds. Hayes notes in his tweet, that it would be “politically toxic for the Fed to be seen bailing out foreign banks when so many small domestic banks need help.”
However, if the Fed does not do anything, Hayes mentions that the foreign banks would dump treasuries into a “liquid market and further fucking shit up.”
Due to this crisis, Fed’s balance sheet has increased by $297 billion to $8.63 trillion in the second week of March. This outsized printing of US Dollar will inadvertently albeit slowly increase inflation, which is what the policies have been trying to curb.
All in all, this sticky situation that the Fed finds itself in is very good for Bitcoin, which has started reacting to the uncorrelated and inflation hedge narrative. As a result, BTC has shot up by 68% since the start of 2023 and 20% over the last three weeks.
This is the main thesis behind former Coinbase CTO’s bold prediction of $1 million per BTC in twelve months.
Arthur Hayes notes the ongoing turmoil and tweeted that “Infinite money printing to “save” the banking system is not far away.“
“Studying”— Arthur Hayes (@CryptoHayes) March 21, 2023
The answer will be very clear to them once another mid size bank who can’t access #banktermfundingprogram fails.
Infinite money printing to “save” the banking system is not far away. $BTC = $1mm pic.twitter.com/xCrLtrpP7m
Clarification on "money printer goes brrr..."
"Money printer goes brr" is a meme that gained popularity in March 2020 due to the pandemic when the US Federal Resrve printed roughly $13 trillion. This move inspired the meme where the Federal Chairman is printing money as seen in the image below.
Money printer goes brr
The meme became especially popular among Bitcoin enthusiasts who believed that the additional money supply will eventually find its way to BTC, pushing it higher. This is one of the core concepts of hyperbitcoinization. This theory forms the basis of former Coinbase CTO Balaji Srinivasan's $1 million per BTC bet, who provided clarity on why believes Bitcoin price could reach $1 million in under 90 days.
Jason, I'm glad you recognize the distinction between reporting on the Fed’s crisis and causing it!— Balaji (@balajis) March 21, 2023
While I have you…with zero personal animus, I’m going to need you to correct the record on something. And this is also addressed to @matt_levine and to a lesser extent… https://t.co/2rhA7SXDMX
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