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

Varinder is a Technical Writer and Editor, Technology Enthusiast, and Analytical Thinker. Fascinated by Disruptive Technologies, he has shared his knowledge about Blockchain, Cryptocurrencies, Artificial Intelligence, and the Internet of Things. He has been associated with the blockchain and cryptocurrency industry for a substantial period and is currently covering all the latest updates and developments in the crypto industry.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

The U.S. Federal Reserve, Treasury Department, and the FDIC are exploring a potential guarantee of all bank deposits in the U.S. It will make the FDIC temporarily insure deposits beyond the current $250,000 limit on most accounts, without having to get approval from the U.S. Congress.

As the banking crisis continues despite efforts by the U.S. government and regulators, a total of $18 trillion in deposits would be guaranteed if the crisis expands. The FDIC, Fed, and Treasury Dept have earlier ensured that taxpayers will not pay for this crisis.

While the authorities don’t see the move necessary as they believe the banking sector is safe, but First Republic Bank tumbling 47% on Monday signaled the need for efforts to prevent the spread of contagion.

Meanwhile, traders await the FOMC rate hike decision on March 22 to see if the Fed is really dovish and go with zero or 25 bps. Economists, businesspeople, and crypto influencers have warned the U.S. Fed of worsening market conditions.

Billionaire Bill Ackman took to Twitter to share his concerns about the worsening banking crisis ahead of the FOMC meeting. He believes the Fed should pause due to a number of major shocks to the system after three US bank closures in a week, the demise of Credit Suisse, and the zeroing of its junior bondholders.

Tesla CEO Elon Musk replied to Bill Ackman, saying “Fed needs to drop the rate by at least 50bps on Wednesday.” He also believes that the FDIC must increase the current $250,000 limit to prevent bank runs. Musk and several other crypto influencers warned the Fed of rate hikes increasing recession risk.

Economist Peter Schiff also blamed the U.S. Fed and FDIC for the current banking crisis in the U.S. He thinks banks were performing well prior to the FDIC and inflation will destroy the value of all bank deposits, saying “$18 trillion in deposits “insured” by $100 billion in Treasuries.”

The U.S. banking system is currently insolvent thanks to the Fed and FDIC. Banks where much sounder under a gold standard and prior to the FDIC. $18 trillion in deposits “insured” by $100 billion in Treasuries. The value of all bank deposits will soon be destroyed by inflation.

— Peter Schiff (@PeterSchiff) March 21, 2023

Bitcoin Price Stays Strong Near $28,000

Bitcoin price is currently trading at $27,506, down over 1% in the last 24 hours as investors await the Fed rate hike decision. BTC price will hit the $30,000 mark if the Fed decides to pause the rate hike on Wednesday amid bank woes.

According to CME FedWatch Tool, there’s a 25.5% probability of no rate hike by the Fed and a 74.5% probability for a 25 bps rate hike.

Also Read: Amid Bitcoin Price Rally, BTC Funds See Major Outflows, This Cohort Is Booking Profits

Varinder is a Technical Writer and Editor, Technology Enthusiast, and Analytical Thinker. Fascinated by Disruptive Technologies, he has shared his knowledge about Blockchain, Cryptocurrencies, Artificial Intelligence, and the Internet of Things. He has been associated with the blockchain and cryptocurrency industry for a substantial period and is currently covering all the latest updates and developments in the crypto industry.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.