To protect deposits during an ongoing banking crisis, the Fed launched the Term Bank Financing Program (BTFP) to rescue distressed banks.
According to sources, the program has already injected about $300 billion (R$1.58 trillion) in the past week. Of this, approximately US$140 billion went to Signature and Silicon Valley Bank (SVB).
However, expert forecasts point to an even worse scenario. JPMorgan analysts say the Fed could use up to $2 trillion.
In addition to the US, it is worth noting that other countries are also going through the same situation. For example, last Wednesday (14), the Central Bank of Switzerland released the equivalent of R$284 billion to a single bank.
Bitcoin is rising again, hitting $27,000
While it fell on Wednesday (14) even after breaking $25,000, Bitcoin rose again this Friday (17). Peaking at $27,000 in the morning, the largest cryptocurrency on the market hit a new annual price spike.
The main reason would be precisely this cash injection by both the Fed and other central banks in the middle of the banking crisis that seems to be just beginning.
After all, JPMorgan analysts pointed out that the Fed could use up to $2 trillion (R$10.5 trillion) to calm the market. “Use of the Fed’s BTFP is likely to be big”pointed to the JPMorgan report, released by Bloomberg.
As can be seen in the case of Credit Suisse, these repayments must also be made outside the US. Therefore, the lack of trust in such institutions and the unbridled cash infusion push Bitcoin up.
The Fed continues to raise interest rates
Another Fed maneuver to watch is its stance on interest rates. Since the European Central Bank ignored the banking crisis and raised interest rates by 0.5% this Thursday (16), it is possible that the Fed will do the same at its next meeting, scheduled for next Wednesday (22).
Even with the pressure from the Fed’s monetary policy, Bitcoin is showing a 60.5% year-over-year increase. That is, it is very possible that we will see another all-time high for cryptocurrency once the US Federal Reserve resets rates, which should not happen until next year.
Therefore, cryptocurrency may seem interesting to those who like to take risks. After all, even though fixed income investments are at their peak, a possible new Bitcoin bull cycle could bring higher and faster returns.
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Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
