Could Japan’s Banking Crisis Trigger Another Bitcoin Rally? Arthur Hayes Think So
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Arthur Hayes, the co-founder of BitMEX, recently suggested that Japan’s banking system is on the brink of a significant crisis, potentially leading to another surge in Bitcoin (BTC) and cryptocurrency markets. He argues that Japanese banks, burdened by large amounts of underwater U.S. government bonds, will require a substantial bailout soon, similar to the situation faced by U.S. banks in March 2023. Arthur Hayes Predicts Bitcoin Surge Amid Japan Crisis Arthur Hayes has warned that Japanese banks are dealing with severe financial issues due to the massive losses on their U.S. government bonds. He likened this situation to the crisis experienced by U.S. banks last year when Silicon Valley Bank disclosed a $1.8 billion loss on its underwater bonds, prompting a quick intervention by the Federal Reserve and the U.S. Treasury. To prevent a banking system collapse, the Federal Reserve promised to backstop any U.S. Treasuries held at U.S. banks fully. In a recent development, Japan’s fifth-largest bank, Norinchukin, announced its plan to sell $63 billion in U.S. and European bonds by March 2025 because the paper losses on these bonds have become unsustainable. Hayes believes this is only a small part of the problem, noting that Japanese banks collectively held $850 billion in foreign bonds at the start of 2022, including nearly $450 billion in U.S. bonds, according to an IMF survey. Also Read: Hong Kong ETF: Guotai Junan Pioneers Unique Spot ETF Offerings Bond Sale Could Boost Bitcoin Prices Arthur Hayes suggests that a bond sale of this magnitude would be unacceptable to U.S. Treasury Secretary Janet Yellen, as it would spike bond yields, making it extremely expensive to fund the federal government. He anticipates that Yellen will demand the Bank of Japan (BOJ) purchase these bonds from Japanese banks under its supervision. To facilitate this, Hayes…
Filed under: News - @ June 22, 2024 9:14 am