The U.S. Federal Reserve sticks to its goal of reducing inflation to 2% and raises interest rates by another 25 bps to 4.75%-5%. Fed Chair Jerome Powell said officials don’t see rate cuts this year and could raise rates higher than expected if needed. He also added that US banks are “sound”. Meanwhile, Treasury Secretary Janet Yellen disclosed that the FDIC will not offer “blanket insurance” for all bank deposits.
Notable personalities including Tesla CEO Elon Musk, billionaire Bill Ackman, former Coinbase CTO Balaji Srinivasan, and Ark Invest CEO Cathie Wood criticized the U.S. Federal Reserve’s rate hikes amid the banking crisis.
Elon Musk called the Fed rate hike decision “foolish”. He asserts it will worsen depositor flight as people move money from low-interest savings accounts to high-interest money market accounts. Earlier, Elon Musk warned the Fed of worsening market conditions and the banking crisis if the Fed continues to raise rates.
A major driver of depositor flight is people moving money from low interest savings accounts to high interest money market (Treasury Bill) accounts.
This foolish rate hike will worsen depositor flight.
— Elon Musk (@elonmusk) March 22, 2023
Bill Ackman also urged the Fed to pause rate hikes in March due to the ongoing banking crisis caused by the closure of three banks by regulators and Credit Suisse issue.
In fresh warnings after the Fed rate hike and Yellen comments, he said bank runs will continue risking impact on lending rates and the U.S. economy. Also, the Treasury not considering an expansion of deposit insurance is a “big mistake.”
This is a big mistake. We are suffering from self-inflicted wounds. @SecYellen statement combined with 25bps puts even more pressure on the non-SIBs. https://t.co/yFD4TDuNCC
— Bill Ackman (@BillAckman) March 22, 2023
Balaji Srinivasan asserts the U.S. government is secretly printing trillions of dollars while hiking rates. The Fed rate hikes caused domestic banks to collapse and risks further bank runs. He claims the BTFP, the swap lines, and the “FedDIC” policy are meant for printing money. The system will continue to attack crypto for its failure, but crypto is resilient.
He recommends buying Bitcoin and getting coins off exchanges. Also, he believes the crypto industry can thrive in a Bitcoin-friendly jurisdiction like Florida and Texas, or El Salvador and UAE.
Crypto Market Strong After Fed Rate Hike
Cathie Wood took to Twitter reminding investors and the government that crypto assets soared after the collapse of Silicon Valley Bank. The 20-fold increase in the Fed funds rate will make regional banks and the equity and bond holders to be “wiped out.”
TradFi businesses and individuals are hedging their fiat assets with some crypto assets. Meanwhile, regional banks are slowly moving from a liquidity crisis to a solvency crisis.
Meanwhile, BitMEX co-founder Arthur Hayes thanked Fed Chair Jerome Powell for the rate hike. Hayes claims it will help him buy the Bitcoin dip, becoming more bullish on Bitcoin hitting $1 million.
The faster Powell hikes, the faster he will have to cut. I will be buying all dips in $BTC. Thank you ser for more entry points.$BTC = $1mm#banktermfundingprogram = Yield Curve Control
— Arthur Hayes (@CryptoHayes) March 22, 2023
Also Read: Bitcoin Price and Crypto Market Tank Over SEC’s Action on Coinbase
The post Elon Musk, Bill Ackman, Balaji, Cathie Wood Outrage Over US Fed Decision appeared first on CoinGape.
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