Money printer go brrr sparks crypto market mining
The Fed announced “additional funding” on March 12 to prop up the banking sector. Crypto market capitalization surged to pre-crisis levels following the announcement – sparking a wave of bullishness.
Last week the market passed over rumors that Silvergate was insolvent. On March 9, those fears were realized when the crypto bank said it intended to wind down its operations. Other systemic risks presented such as Signature Bank and Silicon Valley Bank also collapsed.
As the crisis unfolded, the crypto market capitalization recorded a local low of $912.84 billion on March 10 – marking an eight-week low. Market leader Bitcoin lost $20,000 – finding support at $19,600 and raising expectations of further losses at key support levels.
However, following the Fed’s emergency measures, the crypto market saw a jump in valuation peaking at $1.03 trillion – registering a 13% increase from bottom to top.
Quantitative Easing (QE) is back
The Fed’s Bank Term Funding Program (BTFP) will offer financial institutions loans of up to one year at the face value of assets. It would provide additional liquidity “against high-quality securities,” thereby removing the pressure to force said securities.
“This action will strengthen the banking system’s capacity to secure deposits and ensure the ongoing supply of money and credit to the economy.”
Founder of Custodia Bank Caitlin Long — having been through the BTFP termsheet — pointed out the program’s generosity, including that non-US banks are eligible, the face value of the assets offered, no fees, no prepayment charges and a $25 billion “stock market stabilization fund.”
Commentators raised concerns that the American taxpayer is on the hook for this program. Others said that individuals do not receive similar transparent treatment on personal debt.
Crypto, risk active in favor
Chiming in, Bitcoin maximalist Max Kaiser said the Fed stepped in and failed to scale back their Ponzi. He estimated the program will cost $50 trillion, triggering “an easy 10x from here” for the leading cryptocurrency.
“Now we are going to the biggest flood of money printing in history. Easily more than $50 trillion.“
Former CEO of BitMEX Arthur Hayes echoed Keiser’s sentiment, tweeting, “Are you ready for the damn bull market?”
Nevertheless, despite the renewed optimism, Long warned that the action will only kick the can down the road, with inflation set to continue running red hot.
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