Dimon Warns of Treasury Market Tension That Could Push Fed to Act, Fueling Bitcoin Demand
JPMorgan Chase CEO Jamie Dimon has expressed concern over potential disruptions in the $30 trillion U.S. Treasury market, warning that stringent regulations could spark a crisis, prompting the Federal Reserve to intervene — an outcome reminiscent of the 2020 economic turmoil.
In a Friday earnings call, Dimon stated that the “kerfuffle” in the Treasury markets, driven by current regulatory constraints, could trigger market panic and necessitate Fed intervention. This comes amid rising bond yields and escalating volatility, further aggravated by U.S.-China trade tensions.
Dimon criticized the current banking regulations, which he believes prevent banks from stepping in to provide liquidity when the market is stressed. He pointed out that a similar situation unfolded in 2020, when the Fed launched an unprecedented bond-buying program to stabilize the Treasury market.
He is advocating for reforms, including exempting Treasuries from leverage ratio calculations, which could provide banks with more freedom to buy government debt without depleting their capital buffers.
“If these rules aren’t adjusted, the Fed will have no choice but to intervene again, and that’s not a policy solution I support,” Dimon emphasized.
A significant disruption in the Treasury market could send shockwaves through the broader economy, influencing everything from corporate bond yields to mortgage rates. Dimon also noted that such turmoil might lead investors to turn to alternative assets, like bitcoin (BTC), which has historically been viewed as a store of value during times of monetary instability. This was evident in 2020, when bitcoin surged in value following the Fed’s emergency stimulus measures.
With concerns over traditional assets intensifying, Dimon’s comments point to the possibility of a renewed demand for cryptocurrencies as a hedge against potential instability in the global financial system.
