Bitcoin Crash Warning: Fed Policy Trap and Liquidity Fears Fuel Monday Fears
A warning about a potential Bitcoin crash has been circulating on X, with a popular post comparing the S&P 500 chart to the so-called Benner cycle.
The post argues that the Federal Reserve has reached a policy trap, where raising interest rates could push borrowing costs and long-term Treasury yields higher, while weakening economic growth and increasing debt-servicing pressure.
On the other hand, holding rates steady or cutting them could worsen inflation, loosen financial conditions, and eventually force another round of tightening.
Long-term Treasury yields are currently at their highest levels since 2007, with roughly $40 trillion in U.S. debt, the post points out.
The analyst also compares the Federal Reserve's situation to Japan's, warning that the Fed could face a similar policy dilemma.