Late last week, Arthur Hayes, Co-Founder and Former CEO of BitMEX, wrote about the potential implications of the Federal Reserve’s new Bank Term Funding Program (BTFP), which came as a response to the recent (SVB) collapse of Silicon Valley Bank (SVB).
In this blog post, Hayes calls BTFP “Yield Curve Control (YCC) repackaged in a new, shiny, more palatable format” and says, “it is a very clever way to accomplish unlimited buying of government bonds, without actually having to buy them. He argues that the move will significantly affect the banking industry and financial markets and may drive more investors towards alternative assets such as Bitcoin.
Hayes notes that, unlike the 2008 financial crisis, this time around, the Fed did not bail out banks and allow them to participate in the upside. Instead, banks must pay higher interest rates, leading to negative earnings. This situation may persist until bank balance sheets are repaired, and he expects that bank stocks will likely underperform the general market.
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