TLDR
- Bitcoin dropped to a four-month low of $103,850 during renewed bank stress.
- Zions and Western Alliance stocks plunged amid loan write-offs and weak trust.
- Jack Mallers said Bitcoin is reacting first to an expected liquidity crisis.
- Yields fell and spreads widened as fears of another banking crisis grew.
Regional bank stocks in the United States have come under renewed pressure, reigniting concerns about financial stability. Strike CEO Jack Mallers said this turmoil shows Bitcoin is responding to growing liquidity stress in the economy. As bond yields drop and spreads widen, Mallers suggested that Bitcoin is “smelling trouble,” predicting that the Federal Reserve may soon inject liquidity to prevent deeper market fallout.
Renewed Pressure on Regional Banks
Several U.S. regional banks have faced sharp stock declines this week. Zions Bancorporation and Western Alliance both saw their shares fall amid concerns over bad loans and weakening balance sheets. The losses revived fears of a repeat of the 2023 banking crisis, which saw multiple mid-sized banks collapse.
Despite regulatory changes and government backstops introduced after that crisis, confidence in regional lenders remains fragile. Analysts noted that many banks continue to carry risky commercial loans and rely heavily on depositor trust, which can erode quickly during periods of stress.
Mallers: Bitcoin Anticipates a Liquidity Crunch
Jack Mallers, CEO of Strike, argued that Bitcoin is acting as a forward indicator of stress in the financial system. Posting on Primal and X, he said, “Bitcoin is accurately smelling trouble right now. The U.S. is going to have to inject some of that sweet, sweet liquidity soon and print a ton of money or else their fiat empire goes kaboom.”
He added that Bitcoin is “the most sensitive to liquidity” and “moves first.” Mallers believes that as yields fall and spreads widen, markets are signaling deeper problems that will push policymakers toward easing measures. According to him, when the Federal Reserve intervenes, Bitcoin will likely respond ahead of other assets.
Fragile Confidence After the 2023 Crisis
The 2023 regional banking crisis was contained through emergency government support, but some analysts argue it was never fully resolved. The quick bailouts and acquisitions helped prevent wider contagion but created what economists describe as moral hazard. Many banks began taking more risk, assuming government protection would extend beyond Federal Deposit Insurance Corporation (FDIC) limits.
Recent reports from the Associated Press indicated that some banks have written off large commercial loans, adding pressure to their already thin margins. The Kobeissi Letter noted that the banking system remains dependent on government backing rather than stronger balance sheets, leaving it vulnerable to fresh shocks.
Bitcoin’s Price Drop Despite Bullish Forecasts
While Mallers and other Bitcoin advocates see long-term benefits from any new liquidity measures, the asset has not yet reflected this optimism. Bitcoin fell to a four-month low of $103,850 on Friday, losing more than $5,000 within hours. It later recovered to about $107,000 on Saturday morning in Asia but remains over 15% below its all-time high.
BitMEX co-founder Arthur Hayes also commented on the situation, writing, “BTC on sale. If this U.S. regional banking wobble grows to a crisis, be ready for a 2023-like bailout. And then go shopping, assuming you have spare capital.”
Despite the current price weakness, Bitcoin continues to attract attention from investors watching the growing stress in regional banks. As markets brace for potential Federal Reserve action, many are observing whether Bitcoin will again move first, as Mallers suggests, when liquidity returns to the system.
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