Is the US Federal Reserve’s bailout of international banks a bullish signal for Bitcoin?


  • The US Federal Reserve is taking coordinated action, enhancing daily international swap lines. 
  • US Dollar swap line balances will balloon and reflect on the central bank’s balance sheet, while Bitcoin prices continue rising amidst uncertainty. 
  • The failure of two US banks and a rout in Credit Suisse shares sent shock waves through the market, reminding participants of the 2008 financial crisis. 

The US Federal Reserve has announced a coordinated effort with five other central banks to boost US Dollar liquidity. The Fed’s reaction to a series of banking collapses in the US and Europe is to enhance the frequency of 7-day maturity operations of international swap lines from weekly to daily. 

Swap lines are agreements between central banks to exchange currencies and shore up liquidity during times of crisis. Experts believe this is a bullish sign for Bitcoin and cryptocurrencies as an economic crisis similar to 2008 is brewing on the horizon. 

Also read: Weekly Recap: Bank runs, stablecoin drama, Voyager bankruptcy hearing, threat to DOX Shiba Inu founder

US Federal Reserve coordinates central bank action, shores up US Dollar liquidity

While crypto Twitter is abuzz with calls for the collapse of the US banking system, the Federal Reserve is taking coordinated action with other central banks. The US central bank’s goal is to enhance liquidity provision via swap line arrangements. 

To stabilize the US economy after the collapse of two large banks, the Fed stated in a press release issued on March 19, that it was working with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank. 

The coordinated effort is aimed at keeping the US dollar flowing amid a series of banking blowups in the US and Europe. Swap lines have served as an emergency-like action for the Federal Reserve in the 2007-2008 global financial crisis and the COVID-19 pandemic in 2020.

Is the US Fed’s move bullish for Bitcoin and cryptocurrencies?

Jim Rickards, an author and journalist, believes that the US Dollar crisis is spreading faster. Since international banks need US Dollars, the US Central Bank prints USD and swaps with these institutions, swapping back later and collecting interest on it. 

Former BitMEX CEO Arthur Hayes tweeted:

The collective action by central banks will therefore reflect on the US Fed’s balance sheet and crypto experts consider this a sign of a brewing financial crisis. Crypto enthusiasts believe that this will push Bitcoin price higher.

Ryan Selkis, CEO at Messari believes that the banking crisis and general economic conditions will help boost Bitcoin prices. Selkis’ prediction for Bitcoin price is a target of $100,000 within the next twelve months, in the best case scenario.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

US presidential election outcome could shape the future of crypto

US presidential election outcome could shape the future of crypto

US citizens will go to the polls to elect a new president on November 5, and their choice could be key for the future of the crypto industry and thus the price outlook for Bitcoin (BTC).

More Cryptocurrencies News
Bitcoin ETFs beat Gold ETFs with 65% gain since launch

Bitcoin ETFs beat Gold ETFs with 65% gain since launch

Bitcoin ETFs have reshaped the digital asset investment landscape since their approval in January. Their total assets under management climbed over $70 billion during the weekend, placing them ahead of other investment products, including gold.

More Bitcoin News
XRP eyes 10% rally amid relisting across crypto exchanges and growing institutional demand

XRP eyes 10% rally amid relisting across crypto exchanges and growing institutional demand

Ripple's XRP is trading at $0.5050 up slightly by 0.2% in the past 24 hours as it struggles to sustain a move above a key symmetry triangle resistance. Meanwhile, in its recently released Q3 report, Ripple noted the rising listing and relisting of XRP across crypto exchanges and global platforms.

More Ripple News
Ethereum Price Forecast: ETH struggles below $2,500 amid State of Michigan pension fund investment in ETH ETF

Ethereum Price Forecast: ETH struggles below $2,500 amid State of Michigan pension fund investment in ETH ETF

Ethereum is trading near $2,420, down about 1% on Monday, but could bounce off a key descending trendline close to the $2,258 historically high demand zone. Meanwhile, the State of Michigan pension fund revealed an investment of $11 million in ETH exchange-traded funds.

More Ethereum News
Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP