While the positive news from the FED, regulators and other big banks worried about whether the banking crisis will escalate in the USA partially subsided, Bitcoin rose to $26600 levels again today.
After the big US banks announced $30 billion in support for the struggling small banks, the expectations that the liquidity crisis was not in a situation like 2008 rose.
JP Morgan, Citi Bank, Bank Of America, Wells Fargo and Morgan Stanley will provide $30 billion in liquidity support to First Republic Bank, which is experiencing liquidity problems.
— Bitcoin System (@bitcoinsystem) March 16, 2023
In addition, after the closing of the markets yesterday, the FED announced its weekly balance sheet figures. Accordingly, the Fed increased its balance sheet by $300 billion last week, when the bank crisis broke out.
While it is stated that this increase is due to the loans given to banks with liquidity problems, is the FED going to quantitative easing again to save the banks, due to the first increase in the balance sheet after November 2021? questions increased.
Economist Erkan Öz stated that this is not a monetary expansion and it is not certain whether it is permanent or not. According to Öz, these uncertainties will become clear with the interest rate decision to be announced on March 22.
“This is not QE. Because the Fed did not buy bonds and replace them with cash.
New loans have been opened to bankrupt banks and those who are in danger of going bankrupt.
For depositors of banks that lost $142.8 billion
Credit demand of banks that are worried about $11.9 billion sinking
The rest are other concerns
This still means an inflow of liquidity into the market.
But will it be permanent? Not sure
Will it push the markets up quickly?
Therefore it is not clear
Maybe there will be a direct positive effect if the Fed does not raise interest rates on March 22.
It was known that the FED was nearing the end of interest rate hikes. The possibility that the banking crisis could shorten this process even more had a positive impact on the markets.
While the increase in the FED’s balance sheet and the 30 billion dollar move of the US banks caused the Asian markets to open positively, bitcoin It rose with expectations that interest rate hikes in risky assets such as assets will stop and tightening will slow down.
March 22 Will Be The Breaking Moment
The interest rate hike by the FED on March 22 is very critical for the markets. The general expectation is a 25 basis point interest rate increase, but the messages given here will be followed more than an interest rate increase.
Banks’ economic boards talk about future uncertainty in all their statements these days. The changes to be made by the FED in the text of the interest rate decision on March 22 will be decisive for the direction of the markets.
Will the section on “continuing interest rate hikes will be appropriate”, which the FED frequently uses in its texts, be included in the new text? Will the FED want to keep interest rates constant for a while and make observations? Many questions will be answered on March 22.
As we enter the weekend before the critical meeting, it is important for investors to stay away from high leverage. Because, we can see up and down volatile movements in the low liquidity environment at the weekend. This weekend before March 22, we can see the volatility rise even higher.
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