Arthur Hayes Place $1M Bet on Bitcoin as NYCB Teeters on the Edge of Bankruptcy

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Arthur Hayes, known for his role in founding BitMEX, has made a bold prediction regarding the fate of New York Community Bankcorp (NYCB) following its recent downgrade by Moody’s to ‘junk’ status. This downgrade resulted from various financial challenges and governance issues faced by NYCB, including reported losses and a reduction in dividends due to problematic loans, particularly in commercial real estate. 

Major Banking Collapse on the Way, Predicts Arthur Hayes

Hayes predicts that as NYCB faces financial challenges, the price of Bitcoin will rally, fueled by expectations of increased money printing by the Federal Reserve. 

Soon after this news, NYCB’s shares dropped to 22% all due to reporting losses and cutting dividends about unpaid loans, especially in commercial real estate. These troubles began after it acquired assets from struggling Signature Bank last year.

According to Hayes NYCB’s troubles could escalate to the point of bankruptcy. He argues that traditional measures such as the Federal Reserve’s support programs may not be sufficient to address NYCB’s specific challenges. Moreover, he believes that if NYCB’s situation worsens, it could trigger a broader banking crisis, potentially leading to government intervention or bailouts.

In the meanwhile, NYCB faces legal action from shareholders who allege that the bank was hiding crucial information about its financial health, leading to a significant decline in the stock price and the collapse of other regional banks. This lawsuit adds further pressure on NYCB amidst its ongoing challenges. 

Hayes $1M BTC Bet, Amidst the Crisis 

In response to these developments, Hayes anticipates a rally in the price of Bitcoin. Drawing parallels to a similar situation in March 2023 when BTC soared 40%, he expects Bitcoin to experience volatility initially but ultimately to benefit from the uncertainty surrounding traditional financial institutions. 

Reflecting on past crises, including the 2008 financial crisis, the argument was made that central banks, like the Fed and Treasury, responded with money printing. This led to a bullish prediction for Bitcoin, envisioning a value of $1 million. This thought reflects his belief that Bitcoin serves as a hedge against traditional financial risks and uncertainties. 

Bitcoin Stays Calm

It’s not just the US dealing with wider economic instability but other markets, such as China’s CSI 1000 index lost $7 Trillion and dropped 8% in a day, making significant losses, yet Bitcoin has not shown significant price reactions to these macroeconomic events. At the time of writing, Bitcoin was trading at $42,232.