US Banking System Will Lose Massive Chunks of Wealth From American Businesses Seeking Yield: Arthur Hayes

BitMEX founder Arthur Hayes says that US banks are about to take another hit, this time from businesses looking to outperform low interest rates.

Writing in a new essay, Hayes says that the recent “exodus” out of the US banking system will likely get worse.

According to statistics compiled by the Federal Reserve Economic Data (FRED) system, depositors yanked $30 billion out of American bank accounts from May 10th through May 17th.

The numbers represent an increase of more than $4 billion over the previous week.

The US banking system now has a total of $17.15 trillion in deposits, compared to $18.03 trillion one year ago.

Hayes says with the high rates now available on money market funds that invest in US treasuries, banks will likely see another wave of withdrawals from investors and businesses looking for better returns.

“Over $1 trillion has been removed from the US banking system since last year. The big question going forward is, will this exodus continue? Will businesses and individuals continue to move money from 0% yielding bank accounts into money market funds yielding 5% or 6%?

Logic tells us the answer is an obvious and resounding ‘absolutely.’ Why would they not, if all it takes is a few minutes on their smartphones to 10x their interest income? The US private sector will continue to pull money from the US banking system until the banks offer competitive rates that match at least the Fed funds rate.”

Hayes is also predicting that a bull market is now ahead for Bitcoin and that BTC will not revisit $20,000 ever again.

“I expect that Bitcoin will hold firm here. I do not believe we will retest $20,000 or come anywhere close. As money slowly trickles into the global risk asset markets, a strong base of support will form. Volatility and trading volumes always disappoint during the northern hemispheric summer months, so I am not surprised that degens plagued by boredom have checked out of crypto trading for the time being. I will use this time of calm to slowly increase my allocation to Bitcoin after the [US] Treasury’s General Account is replenished.

As more and more pundits start talking about what is happening to the billions of dollars printed by the Fed and US Treasury and handed out as interest, it will become common knowledge once more that the money printer is going brrr. And when the printer goes brrr, Bitcoin goes boom!”

Generated Image: Midjourney

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