JPMorgan CEO Jamie Dimon Warns of Potential Chaos in U.S. Treasury Market, Fed May Be Forced to Intervene. Will Bitcoin Benefit Again Like in Early 2020 Pandemic?
(Background: Arthur Hayes: Bitcoin Will Enter “Only Up” Mode! Genius Trader Eugene Stops Out of Altcoin Short and Turns to Watchful Waiting)
(Context: Will Bitcoin Surge? Arthur Hayes: RMB Depreciation Will Trigger Massive Capital Flight to BTC from China)
As U.S. long-term Treasury yields soar and market volatility escalates, JPMorgan CEO Jamie Dimon has warned that the U.S. Treasury market may face renewed chaos, prompting the Federal Reserve to potentially intervene in a manner similar to its actions in the early days of the 2020 pandemic.
Currently, bond liquidity is rapidly deteriorating, increasing market volatility, which not only tests the limits of regulatory systems but may also reignite market demand for Bitcoin as a safe haven.
Dimon Warns: U.S. Treasury Market Will Fall into Chaos, Fed May Be Forced to Intervene
During a conference call regarding earnings on April 12, Jamie Dimon stated that the nearly $30 trillion U.S. Treasury market is on the brink of potential chaos. He pointed out:
“The Treasury market will inevitably face a kerfuffle; the Fed won’t act too soon unless they start to feel panic.”
Dimon believes that current regulatory restrictions make it difficult for banks to step in and support the market during liquidity crises, which could replicate the situation in early 2020 when the Treasury market experienced a severe liquidity crisis, prompting the Fed to quickly launch trillions of dollars in bond-buying programs to stabilize the market.
Coincidentally, Bitcoin prices began to soar in March of that year. Although factors such as the halving effect were also at play, the market widely acknowledges that the Fed’s monetary easing acted as a crucial catalyst. With a similar situation potentially unfolding now, does this imply that Bitcoin could benefit once again?
Dimon Advocates for Allowing Banks to Freely Purchase Bonds
Additionally, Dimon urged that consideration should be given to excluding Treasuries from leverage ratio calculations, allowing banks and other financial institutions to purchase more government bonds without impacting their capital adequacy ratios; otherwise, they will have to rely on Fed intervention, which he describes as “a terrible policy choice.”
The U.S. Treasury market plays a central role in global finance, setting the tone for everything from mortgage rates to corporate bond yields. Dimon cautioned that if this system were to become paralyzed again, the consequences could trigger a chain reaction throughout the economy.
Funds May Shift to Bitcoin
Amid the chaos in the bond market, Bitcoin surged against the trend last week, climbing from $74,508, with some investors anticipating that once the Treasury market collapses, the Fed would inevitably restart its bond-buying or liquidity support mechanisms, akin to a form of monetary easing, potentially driving up assets like Bitcoin.
One of the prominent proponents of this position is Arthur Hayes, co-founder of BitMex, who previously stated that if the MOVE Index (the bond market’s version of the VIX, a measure of U.S. Treasury volatility) breaks 140, the Fed will be forced to “restart the printing press,” benefiting Bitcoin’s rise.
Yesterday, he also shared a chart showing the surge of U.S. 10-year Treasury yields to 4.56%, noting:
“The situation is developing intensely. If this trend continues, we will see more policy responses this weekend. Bitcoin is about to enter UP ONLY mode.”
As of the time of writing, U.S. 10-year Treasury yields are reported at 4.458%, down -0.87% in the last 24 hours.
It’s on like donkey kong. We will be getting more policy response this weekend if this keeps up. We are about to enter UP ONLY mode for $BTC.
