Barely 11 months after the banking crisis of 2023, the US financial sector is once again under pressure. New York Community Bank (NYCB), which bought Signature Bank after its bankruptcy in March 2023, has seen its share price plummet by 62% in just a few days. This event raises concerns about the resilience of the financial system, and has some investors already looking to Bitcoin at $1 million.
Is a new banking crisis looming?
Only 11 months after the banking crisis of 2023, which saw the collapse of several US banks, the crisis doesn’t seem to have completely dissipated.
Indeed, New York Community Bank (NYCB), which had bought Signature Bank after its bankruptcy in the spring of 2023, seems to be struggling to get back on its feet, its share price having fallen by 62% in just 1 week.
After recovering 140% of its value over the course of 2023 thanks to the bank rescue plan implemented by the US Federal Reserve (FED), NYCB’s share price had stabilized above $8.5 before collapsing following the release of the bank’s Q4 2023 results on January 31, 2024.
These results revealed that the bank was in need of a $552 million provision to cover losses generated by several credits. This situation is likely not only to complicate access to credit, as the bank will have to allocate its funds to repay its debts, but also to represent a systemic risk for all the country’s banks, as well as for the US real estate market.
A $1 million bitcoin against the backdrop of a banking crisis?
This event seems to replicate the banking crisis and the tumble in Silvergate’s share price, followed by its bankruptcy in March 2023. A few days later, faced with a bankrun affecting all banks, the FED announced that it would guarantee the deposits of customers of failed banks.
This announcement had a significant impact on stock markets and cryptocurrencies, notably on the price of Bitcoin, which jumped 26% in the following days.
Reacting to NYCB’s falling share price, Arthur Hayes, co-founder of cryptocurrency exchange BitMEX, quipped about the situation in a post on Network X.
Oh baby …
From junk to bankrupt, that’s the future.
And then more money printer go brrrr$BTC = $1mm pic.twitter.com/6Ia00GWYa5
– Arthur Hayes (@CryptoHayes) February 7, 2024
Hayes suggests that, should NYCB fail and a new banking crisis emerge, the FED would once again intervene to preserve the banking system and the US economy by injecting more money, an act often synonymous with increased inflation.
He concludes with “BTC = 1 mm”, expressing a highly optimistic prediction that Bitcoin will reach a value of $1 million.
This prediction directly echoes that of Balaji Srinivasan, a well-followed investor on networkX, who, following the banking crisis of 2023, predicted that the United States would face hyperinflation, propelling Bitcoin to a value of $1 million within 90 days.
This event did not come to pass, and it remains impossible to predict the future. However, while such a valuation of Bitcoin would delight many cryptocurrency investors, hyperinflation in the USA would not be desirable.
Indeed, it would represent a significant monetary devaluation of several currencies and weaken many industries around the world.
