Strike CEO warns Bitcoin may be signaling trouble for US banks

U.S. regional banks are coming under pressure, suggesting their post-2023 reforms may not have gone far enough, and Bitcoin could stand to benefit if a liquidity squeeze follows.

For his part, Jack Mallers, CEO of Strike, reads the most recent banking upset as an indication that Bitcoin is pricing in a pending liquidity squeeze, and that the Fed’s next action will drive another leg in the BTC rally.

Mallers commented, “Bitcoin is accurately smelling trouble right now. The U.S. is going to have to inject some of that sweet, sweet liquidity soon and print a ton of money or else their fiat empire goes kaboom.”

Mallers says Bitcoin may surpass other currencies

In a X-post, Mallers recently said that Bitcoin could well be the market’s early warning system. In his words: “A truth machine”, Bitcoin response speeds today are up to changes in liquidity. He highlighted growing stress in yields and credit spreads as evidence, predicting that Bitcoin would again lead when the Fed loosens its policy.

Regional bank stress continued into March 2023, analysts say; the authorities merely stood by and allowed the problem to persist at the time through bailouts, acquisitions, and inaction. In doing so, moral hazard was introduced, and banks became predisposed to excessive risk-taking; they grew confident that deposits would still be covered, even beyond the protective coverage provided by the FDIC.

The Associated Press reported Friday that regional banks are once again under pressure from mounting losses on commercial loans, reigniting Wall Street’s worries about their stability. Shares of Zions Bank and Western Alliance plummeted this week after both banks disclosed significant loan problems, fueling concerns in a market that has yet to regain confidence following the 2023 turmoil fully.

According to the Kobeissi Letter, the U.S. banking structure is weak, relying more on government intervention than fiscal prudence. With confidence never fully restored, any weakness in regional banks continues to weigh on the entire market.

Hayes has compared the current market conditions to those of 2023

The current banking turbulence has yet to lift Bitcoin; instead, it plunged to $103,850 on Friday, a four-month low after losing over $5,000 in a single session. As of Saturday morning in Asian trading, Bitcoin had recovered to about $107,000 but remained over 15% off its all-time peak.

Co-founder of BitMEX, Arthur Hayes, warned that the market’s behavior is making him feel as though they are back in 2023, noting that another round of bailouts may be necessary if the woes of regional banks worsen. He called Bitcoin’s pullback a buying opportunity.

Earlier, supporters of gold had welcomed its recent break from Bitcoin’s price trend. Peter Schiff, a prominent Bitcoin skeptic and head of Europac, boldly predicted that gold would reach $1 million an ounce first.

He maintained that what’s happening isn’t only a move away from the U.S. dollar but also from Bitcoin, which he said had disappointed as a safe-haven asset. He further noted  that the bear market will be “brutal” and asked holders to sell their “fool’s gold now and buy the real thing or have fun going broke.”

Still, entrepreneur Anthony Pompliano noted how gold is down over 80% when denominated in BTC. He also mentioned how the flagship crypto is up 15,000% since 2020. Pompliano continued to promote BTC’s safe-haven, adding that other major assets are down when denominated in Bitcoin.

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