New Warning On US Banking System Is Here; Where Does Bitcoin Stand?
It has been just revealed that there is a new warning about the US banking system these days. Check out where the most important digital asset is situated amidst the financial tumult. New US banking warning Arthur Hayes,...
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It has been just revealed that there is a new warning about the US banking system these days. Check out where the most important digital asset is situated amidst the financial tumult.
New US banking warningArthur Hayes, co-founder of BitMEX, has suggested that Bitcoin (BTC) could benefit from a potential crisis in the US banking system.
Hayes believes that the US banking system is in trouble again, with M&T Bank being one of the banks that may face insolvency issues due to its high exposure to commercial real estate (CRE) in its loans portfolio.
“[M&T’s] CRE loans are 34% of the total loan book.
A 20% loss on CRE loans, would wipe out 36% of total equity capital. And then they would breach capital adequacy ratios and require a bailout.
M&T is the 20th largest bank in the US uh-oh…
The market smells weakness and shall punish.
Guess we need more free money from the US government to bail out the insolvent banking system.
Bitcoin loves this.”
Hayes suggests that the increasing yields on the 10-year US treasury bond could lead to additional pressure on the US banking system, which in turn, could benefit Bitcoin.
This is because, in such a scenario, the Federal Reserve may have to print money to rescue the banks.
Hayes also believes that the actions of the second and third-largest economies in the world are contributing to the rise in US treasury bond yields.
“Putting aside the Hamas v. Israel two-sided tragedy, the action to watch is over in northeast Asia. Both China and Japan are committed to weakening their currencies and it will lead to disaster for US Treasury bond holders a.k.a. muppets.
As the Japanese yuan weakens, 10-year US treasury bond yields rise. Japan can manage the speed of the devaluation by selling down its holdings of treasuries which is putting upward pressure on yields.”
He continued and stated the following:
“If Japan weakens, China must as well as compete for global exports. Chinese yuan is approximately 10% overvalued vs. Japanese yen based on historical recent trends.
Yuan is strong, and that’s why capital is fleeing China because the yuan can buy a lot more than it should when viewed against the monetary fundamentals.
China is managing the speed of yuan weakening by selling US treasuries as well. China also has a phat stack of dogshit bonds to liquidate, which puts upward pressure on yields.”
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