Going by an analysis of one analyst on X, the Bitcoin rally is happening at a crucial time in the broader financial market. With the world’s first cryptocurrency marching closer to $70,000, it is not all rosy for banks in the United States, considering what’s to happen in the next few weeks.
Late Q1 Through To Q2 2024 Will Define The United States Financial System
While pointing to a potential convergence of events, including the expiration of the United States Federal Reserve’s Bank Term Funding Program (BTFP), the expiry of the Reverse Repo Facility (RRP), and the scheduled Bitcoin halving, it appears that Bitcoin will likely reap huge benefits.
This expected tailwind will be more defined in March when the central bank will relay their decision on, among other things, interest rate and BTFP.
Following the ravages of the COVID-19 pandemic, especially on the economy, the United States Federal Reserve launched the BTFP program in 2020. The purpose of this facility was to relieve banks, enabling them to borrow funds from the central bank for one year.
Through this intervention, the Federal Reserve ensured that banks, most under duress, could reserve funds, helping stabilize the economy.
Meanwhile, the RRP was also launched around the same time the impact of COVID-19 was being felt. Through this arrangement, the United States Federal Reserve created a way for money managers, investment firms, and money market funds to move “park” excess cash with the central bank, receiving interest in exchange.
Interest rates were hiked to incentivize this outflow from the markets to the central bank. Accordingly, cash moved from the markets, including from crypto, to the RRP facility.
Eyes On The Federal Reserve: Will Bitcoin Reach $100,000?
The analyst notes that the BTFP program expires in March, while the RRP facility, which starved crypto and the markets of hard cash in the crypto winter from late 2021, will end in May. The question is whether the United States Federal Reserve will extend the BTFP program, allowing banks to borrow.
Though this will likely be extended as the central bank turns “dovish” and slash interest rates, the RRP facility might not be extended.
What’s an assurance, however, is that Bitcoin will halve its miner rewards in April. This is roughly the same time the United States financial system will either be distressed or booming after the BTFP decision.
If the RRP facility is not extended, and BTC is scarce, considering the current demand, the odds of the coin flying to new highs, perhaps to $100,000, will be highly likely.
Feature image from Canva, chart from TradingView
