The US central bank is pumping more money into bailing out the ailing banking system as the crisis continues. This could be one of the factors driving the war against cryptocurrencies.
The Federal Reserve’s new emergency bank loan just hit $100 billion in use. The rise in bank lending is a clear sign that the US banking crisis is far from over.
The new financing program allows banks to “secretly receive parity on their devalued assets,” said market analyst Joe Consorti.
The banking crisis is not over
The Bank Term Financing Program (BTFP) was created in March 2023. The goal was to make additional funds available to eligible depository institutions. This would help ensure that banks have the ability to meet the needs of all their depositors, in other words, a bank bailout.
Consorti noted that failing banks used the fund to value their assets.
“Banks are turning 50 cents into $1 without other banks knowing they’re in trouble and backing out.”
He added that it was a “band-aid for now,” but “the hidden risk is spreading.”
Nick Timiraos, Wall Street Journal Chief Economics Correspondent observed that Fed lending to banks through the BTFP has reached a new high. Funding increased for the fifth week in a row, he added.
The emergency loan for small banks was also noted by financial analyst ‘Frog Capital’ who commented:
“The Bank Emergency Installment Financing Program (BTFP) that your Fed concocted on its own and told Congress it wouldn’t go above $25 billion, is now over $100 billion.”
Reasons behind the war against cryptocurrencies
Uncle Sam is doing everything he can to keep his struggling banking system afloat. Several major banks have already failed this year as fears of another 2008-style banking crisis mount.
Big banks and Wall Street have a lot of leverage with federal regulators, which may explain why cryptocurrencies are falling so low.
Bitcoin arose out of the 2008 financial crisis, when fractional reserves and toxic loans brought down the system.
Cryptocurrencies are a clear threat to the banking system, which is why it is so vehemently against it. Just today, Binance.US lost its banking partners and was forced to suspend USD deposits.
Banks and their partners in government will continue to fight to crack down on cryptocurrencies, the biggest threat to their profit margins that has ever emerged.
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