The Bitcoin Layer

The Bitcoin Layer

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The Bitcoin Layer
The Bitcoin Layer
Banking crisis is not going anywhere, and the Treasury is out of money

Banking crisis is not going anywhere, and the Treasury is out of money

Tomorrow's FOMC announcement falls to the back of the pack.

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Nik Bhatia
May 02, 2023
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The Bitcoin Layer
The Bitcoin Layer
Banking crisis is not going anywhere, and the Treasury is out of money
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Dear readers,

We have spent the past few trading sessions pondering just what exactly the Fed is doing. March’s bank failures now look to be followed up with April and May failures, and Treasury Secretary Janet Yellen has officially warned Congress that we are less than 30 days away from a default. But don’t worry Jerome, follow your gut. We end with our thoughts on tomorrow’s FOMC.


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Yellen goes into panic

Janet Yellen sent a letter to House Speaker McCarthy begging for mercy. This is not something we witness very often, despite enduring countless debt ceilings endured over the past decade. US Treasury recently updated its borrowing estimates by several hundred billion dollars. The cause? Undershooting tax receipts.

Financial Juice

We see the bounce in cash balance, but without the ability to issue more net debt, and without the big tax influx of April, May is likely to be the last month in which the Treasury can pay its bills.

We were never under any impression that this would all resolve peacefully or even with enough time to breathe. But now that we are down to the wire, our interest goes beyond the debt ceiling—we expect the liquidity swings due to changes in bill issuance and Treasury cash balance to be outsized.

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