The experts of cryptocurrency have recently been debating the possibility of a financial crisis in the United States. This debate has been spurred by the actions of the Federal Reserve with regard to interest rates and inflation. Jeffrey Snider, the Chief Strategist at Atlas Financial, believes that a bank crisis may be on the horizon, backed up by evidence from the heavily bought futures markets for the Secured Overnight Financing Rate (SOFR). The former CTO of the Coinbase crypto exchange, Balaji Srinivasan, postulated that the recent bank failures may only be the introduction to a much larger crisis, potentially following the same pattern as the one induced by the 2008 collapse of Lehman Brothers. Srinivasan lamented on the current FED Chairman Jerome Powell's comments in favor of a 'soft landing', when his sentiments would be better expressed by focusing on the risks of such a scenario. He questioned what will happen when it is finally accepted by the Federal Reserve that a financial crisis is at hand.
The debate in the crypto community has arisen for one simple reason--the effects of the Federal Reserve's inflation and interest rate policies are showing, and experts are questioning the state of affairs to come. Jeffrey Snider highlights the abnormally high volume of buys in the SOFR futures contracts, suggesting a real chance of the FED escalating their measures further. Balaji Srinivasan uses the example of the 2008 financial crisis, noting the domino effect of bank failures then and suggesting the same could be seen again in the current situation. Moreover, he called out Jerome Powell's focus on a soft landing, considering there are very real risks that should be addressed rather than ignored.
The talk of a financial crisis is far from unfounded, and it is necessary that the Federal Reserve be proactive in determining the best course of action. Whether this will call for drastic measures, or a more gradual approach, only time will tell. In the meantime, it is important to look at the warning signs given by the crypto and finance experts, and to consider the potential consequences of the Federal Reserve's policies.
Lucy Clark
- 2023-05-04
Judgment Day: Could the US be Facing a Financial Crisis?
The Federal Reserve's current inflation and interest rate policies, and the reactions of experts in the crypto and finance communities suggest there may be a chance of a financial crisis in the United States. Read to learn more about the warning signs and potential consequences.
