It may take more bank collapses to get crypto back into a bull market

There’s more than one way to get us back to a bull market, but I actually think this would be the fastest. There was a couple things that contributed to the “long btc/short banks” narrative we saw:

1. Financial ownership. This recent crisis really exposed the flaws of fractional reserve banking, hedge funds disguised by american flags tricking people into thinking money was theirs and ready at all times. Bitcoin fixes this, yea its volatile but its not going anywhere. Keep your wallet safe and no one can chuck it into a shitty underwater bond portfolio.

2. Fed pivot. Financial ownership is cute, but not enough to move the big boys. Theyre in it for the pivot, which crypto likes as well. You can see by the predictions (rate cuts, 0bps) the meltdown of the banking sector was thought to be the catalyst for the pivot but the government stepped in and put a bandaid on, allowing deposit flows to stabilize and the Fed to maintain focus on their inflation mandate.

We were all wondering how the Fed would navigate following recent events. I was in the camp that said that the bank turmoil will assist the Fed as it works in tandem on extracting liquidity/tackling credit availability (duplicative rate hike kind of, but hard to gage how much and Powell agrees too soon to tell). The dot-plot was unchanged, which is dovish considering the target funds rate was likely to be raised prior to a few weeks ago.

Powell tried to assuage bank fears saying they have “ample liquidity” for distressed banks and theyre staying the course. Everyone knows thats a lie and there are more SVBs and Credit Suisses out there. They just havent been spotted yet thanks to the luxury of HTM bond portfolios, swimming underneath the surface ($FRC trading was halted 8 times in 1 HOUR). These banks have quadrillions in derivatives with billions in equity, its not sustainable.

Even while this was going on Yellen made a statement ”we are not considering broad increase in deposit insurance”, they think a couple trillion in a rainy day fund is enough. Make no mistake, the banks are in for more pain, just have to see how strong the bandaid is. If the bank sector shows more weakness and we get more failures a pivot becomes less of a choice, there simply isn’t enough to go around. Ill leave you with this from todays Q&A:

“Are you saying de facto deposit insurance covers all savings?”

“Im not saying anything more than im saying.”